European equity funds suffer largest outflows on record


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.