Money market funds hit as equity appetite grows

Money market flows experienced severe withdrawals towards the end of 2012 as investors reallocated capital to other areas, according to the latest figures released by the European Fund and Asset Management Association (EFAMA).

In its latest sales report, which covers 26 European fund associations, EFAMA said the most pronounced change in flows was seen in money market funds, which saw €33 billion in outflows over December 2012.

Despite investors moving away from money market funds, equities showed only modest improvement on the previous month’s data. Sales of equity funds rose from €13 billion in November to €14 billion at the end of December.

This indicates a slowing of the increase seen in the October-to-November data, where equity fund sales increased from €3 billion to €10 billion.

Elsewhere, there was a noticeable fall in bond fund sales, which dropped to €14 billion at the end of December 2012, compared to €21 billion in the month before.

This change, which adds further fuel to the suggestion of an on-going move away from bonds, is a more marked decline than seen between October and November, where sales fell by €4 billion.

Showing the greatest increase in inflows in the December data were balanced funds, which rose from €3 billion of inflows in November to €7 billion in December.

Looking at long-term Ucits as a whole – those excluding money market funds – there was a slowing of inflows between November and December. Inflows dropped from €38 billion in November to €35 billion in December.

Non-Ucits experienced a strong growth in December 2012, rising from €3 billion of inflows in November to €27 billion on month later.

In terms of total assets, Ucits funds as a whole grew 0.5% to sit at €6,351 billion in the December 2012 data. This is while non-Ucits assets ended the year at €8,872 billion, a 0.6% increase on the figures for November.