Fund flows data indicates ‘small oscillation’ taking place

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Talk of a ‘great rotation’ away from bonds and into equities has been dismissed as more of ‘small oscillations’ between asset classes in Lipper fund flow data for December 2012.

The latest Fund Flash report shows there was a definite pick-up in interest for equity funds but the data provider said this was not spurred by a wholesale move away from bond fund investments.

Equity funds received €13.1 billion of inflows for December 2012 – a sharp increase on the two previous data updates - while bond funds fell back slightly to sit at €19.4 billion of inflows.

Lipper said the bond flow figure is above the 2012 monthly average of €18.8 billion.

In the data analysis, Lipper said: ‘Clearly there was a pick-up in sales of equity funds in December but so far one can identify "small oscillations" rather than a "great rotation" in evidence among European investors.’

Figures released last month had shown a significant drop in month-on-month bond fund sales, which fell from €30 billion in data for October to €20.7 billion for November. The December data, therefore, indicates a further slowing of investment.

Sales of equity funds reflect an even more pronounced change of fortunes. Inflows, which rose marginally from €1.3 billion in October to €2.1 billion November, rose a further €11 billion in the December figures.

This is said to have been driven by increased interest in global emerging market equity funds, which experienced €4.2 billion of inflows in December.

Meanwhile, on the bond front, emerging market bond funds were the most popular, with €5.9 billion of sales. This was mainly driven by interest in local currency bond funds, which accounted for €2.3 billion of this figure.

While equity and bond funds saw positive inflows, €26.9 billion was withdrawn from money market funds in December.

Year in review

The publication of the December data enables Lipper to undertake a calendar year review of the market, which shows that long-term fund sales (excluding money market funds) hit €230.4 billion for the year. This is the fifth best annual performance in the last decade.

However, if the €44.5 billion in outflows from money market funds is included, it means the 2012 data is the seventh best industry performance over the past decade.

Cross-border funds as a whole attracted inflows of €220.7 billion in 2012 – again excluding money market funds – and this is the second best cross-border funds sales figure of the past 10 years.

Three groups attracted more than €10 billion of inflows in 2012. These were: PIMCO (€35.1 billion); AXA (€24 billion); and, BlackRock (€14.8 billion). Nine other groups achieved over €1 billion in sales.