Bond funds shatter one month sales record

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The hunger for bond funds shows no sign of relenting as sales in October reached the highest one month total since data was first collected in 2002.

The latest Lipper Fund Flash report showed sales had reached €30 billion for the month. This builds on the positive momentum in fixed income and surpasses the previous record high recorded in data from July of this year. 

Driving the interest in bond funds was demand for high yield bonds and emerging market debt, which saw inflows of €5 billion and €4.8 billion, respectively, in the October data.

The report said this is coupled with an increased interest in a host of fixed income sub-sectors. In total, 10 separate bond sectors each saw inflows of €1 billion or more.

To put the growth into context, bond funds have gone from representing 20.2% of the European fund industry in October 2007 to 28.5% in October 2012 and the assets invested in bond funds now amount to €1.7 trillion.

Equity funds are the ones to have made room for the growth in appetite for bond funds.

The share of the fund industry made up by equity funds has fallen by 7.1% over the same five year period, with equity funds now making up 34% of the industry with €2 trillion in assets.

This was compounded by a fall in equity fund sales, which fell back from September’s figure of €4.6 billion to €1.3 billion in October.

The main drag on performance was seen to be the UK market, which saw €1.3 billion of withdrawals from equity funds.

Lipper highlighted that European and Euroland equities were among the best performing sub-sectors, attracting inflows of €950 million from European investors.

Elsewhere in the data, long-term funds – those excluding money market funds – built on the positive performance seen last month when funds hit a 23-month high with €28.9 billion of inflows.

Under the latest data, inflows increased even further and totalled €31.6 billion for October, which surpasses the September figure and marks a new record high. This brings the year-to-date total €168 billion.

Looking at the groups, there were four companies which stood out in particular, having attracted net inflows of €1 billion or greater.

These were: PIMCO (€4.2 billion), BlackRock (€3.3 billion - €2.2 billion drawn from ETFS), AXA (€2.9 billion) and JP Morgan (€1.3 billion).