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April sees shift from equities to corporate bonds

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The latest data from the European Fund and Asset Management Association shows a continuing trend of investors’ strong demand for long-term funds, a shift in investor sentiment away from equities towards bonds and balanced funds, and a continuing trend of exiting money market funds.

The trend observed since September 2009 continued in April, with sustained demand for long-term funds and capital outflows from money market funds. 

Ucits enjoyed positive net inflows of EUR20bn in April, and net inflows for the first four months of 2010 amounted to EUR116bn.
 
Net inflows into long-term Ucits (Ucits excluding money market funds) remained strong in April, totalling EUR27b – the same level as in March.
      
The split of new money between the different types of long-term Ucits differed very much in April from recent months. For the first time since March 2009, net inflows into equity funds fell to almost zero (EUR230m April against EUR8bn for March), reflecting investor concern over the Greek debt crisis and the economic consequences for Europe. 

Bond funds were the largest-selling funds (EUR15bn), with corporate bond funds being considered by many investors to be lower risk than equity investments and some sovereign bonds. 

Balanced funds also continued to attract net inflows with EUR9bn in April compared to EUR6bn in March.

Outflows from money market funds slowed down to EUR7bn, from EUR19bn in March. Lower cash need on the part of money market funds investors at the beginning of each quarter contribute to explain this development.

Net inflows into special funds reserved to institutional investors fell marginally to EUR6bn in April, from EUR7bn in March.

Total assets of Ucits and non-Ucits increased by 1.4 per cent in April compared to end March.

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