Europeans Cut & run on Equity Funds

The funny part of all this is... The EU zone is NOT experiencing quite as big a mess as we are...Maybe they know something American's don't want to admit?

Data show huge withdrawals
By Steve Johnson
Published: January 14 2008 02:00

European asset managers have suffered a "complete collapse" in support for equity funds amid a "sea of redemptions" for almost all asset classes, according to fresh data from Lipper Feri Fund Market Information.

European investors withdrew a net €26bn (£20bn, $38bn) from collective vehicles in November, Feri found. Stripping out ultra-safe, low margin, money market funds, net redemptions ballooned to €45bn during the month.

This came on top of net outflows of €79bn in the three months to September as investors withdrew money en masse in the wake of the market chaos rippling out from the US subprime mortgage market fiasco, by far the worst quarterly data since Feri began tracking the industry in 2002.

Equity funds suffered net outflows of €25bn in November as a 7 per cent slide in equity valuations "sent withdrawals spiralling into the post-millennium record book", according to Feri. Exchange-traded funds investing in emerging markets were just about the only bright spot, with even erstwhile popular China funds seeing outflows.

Fixed-income funds "continued to battle for survival" against the attractions of deposit accounts, Feri said, as a further €10bn was withdrawn, taking total net outflows for the 11 months to November to €77bn.

The enhanced money market funds sector continued to implode, losing a further €6bn to add to withdrawals of €33.8bn in the third quarter of 2007, while real estate and mixed-asset vehicles also haemorrhaged money.

The November sell-off was evident virtually across Europe. Only a handful of smaller eastern European markets managed positive flows.

Once market falls are factored in, total assets under management across the European fund industry, excluding money market and funds of funds, slumped 4.5 per cent to €4,399bn. Assets managed by UK funds tumbled 5.9 per cent to €585bn, while the French funds industry contracted 4.5 per cent and that of Italy by 3.6 per cent.

Deutsche/DWS was the best performing group in November, attracting net inflows of €1.6bn thanks to its range of ETFs.