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European bond fund sales at four-year high


It was another good news month for European asset managers in March as total fund sales reached EUR17bn, according to a report by Lipper.

Flows were dragged down by a second month of hefty money market redemptions of EUR19bn, but the long-only sales were significantly higher than February’s at nearly EUR36bn.

It brought sales of non-money market funds to EUR98bn, their highest quarterly level for four years.

The main driver was investors’ ongoing enthusiasm for bond funds fuelled by low deposit rates. These funds have attracted over EUR41bn since the beginning of the year and the monthly flow of EUR17bn into this asset class in March was the highest for nearly five years.

Cross-border sales of bond funds were particularly high in March, with ex-liquidity flows rising by over a third to GBP25bn. Managers have managed to cash in on the trend towards more specialist fixed income funds as investors look to diversify their exposure.

In March they opted for global and emerging market bond funds in almost equal quantities. However, over the first quarter emerging market bond funds lead the field with investors increasingly seeing these bonds as an asset class which they can use to gain low risk exposure to the developing markets.

On a country basis, the British were the most enthusiastic fund buyers in March with ex-liquidity sales of EUR2.4bn, followed by the Italians with flows of EUR2.3bn.

In both countries, it was bond and mixed asset funds that proved most attractive to investors, with the latter boosted by the growing popularity of absolute return funds.

In Italy, banks have put their sales muscle very much behind the absolute return concept this year, while in the UK sales tend to boosted in the first quarter tax-planning decisions.

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