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European equity funds suffer largest outflows on record

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European equity funds have seen their largest weekly outflows in history, with $5.8bn worth of redemptions, according to Bank of American Merrill Lynch data.

The UK’s vote to leave the EU is forecast to have a negative impact on growth on the Continent, while concerns about Italian bank debt have been brought into focus after the Brexit result.

GDP growth in the EU has been forecast at 1.6 per cent in 2016 and 1.4 per cent in 2017, according to the IMF. It had previously estimated GDP growth of 1.7 per cent for both years.

From an export perspective Ireland, Malta, Cyprus, Belgium and the Netherlands are expected to be hit hardest by the UK’s vote to leave the EU. In the UK, the IMF says Brexit could trigger a recession.

While European equities suffered in the past week, emerging markets were the big winners, seeing the second largest inflows to debt funds ever ($2.7bn), and the largest inflows into equity since March ($1.6bn).

US equity funds saw the largest inflows since September, with $12.6bn.

In terms of asset classes, high yield received $2.1bn of inflows, the highest on record, while equity inflows of $11bn were the largest in nine months.


Precious metals saw $800m of inflows, continuing a trend of inflows in 25 out of the last 27 weeks.

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Comments

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  1. One must start to wonder about the knowledge and/or competence of investors.

    As ever choosing the right funds is key. But just as a very brief example:
    JOHCM Continenal European, Black Rock European Dynamic and GLG Continental European Growth have all trounced the FT-SE 100 to date. Man has some 44% of the fund in Danish, Swiss and Swedish Equities. Black rock as 46% spread between Danish, Swiss and German and JOHCM has 52% over Swiss, Danish, Dutch and German.

    So do investors (both professional and private) think that Roche, Nestle, Novartis, Sanofi, BMW, Seimens,Merck,Novo Nordisk and Unilever (by way of example) are such poor investments and aren’t likeley to do well Brexit or no Brexit.

    To me this just illustrates an appalling lack of investment knowledge.

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