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Investors pull £75bn from active funds

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European investors have pulled €88bn (£75.2bn) out of actively managed equity funds this year while investing €11.9bn in passive funds, Morningstar data shows.

In its October asset flows report, published today, Morningstar says equity exchange-traded index funds in particular have seen inflows of €1.7bn so far this year.

Looking at fund group flows last month, Standard Life Investments saw the largest outflows in October where funds in the alternative multi-strategy category shed €470m on the back of redemptions in its two underperforming GARS funds.

Conversely, Vanguard attracted €2.1bn net flows in the month thanks to the launch of its US Treasury Inflation-Protected Securities Index inflation-linked bond fund the previous month.

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Overall, Morningstar reports equity funds were net-flow negative for the 10th month running, shedding €4.3bn in October.

The highest inflows in October were into fixed income funds, which took in €11.5bn for the month. This was followed by allocation funds which saw €5.5bn in net new money and alternative funds, which attracted €1.7bn of new assets for the same period.

Morningstar EMEA editorial director Ali Maswarah says: “In the run-up to the US presidential election, European fund investors continued to selectively seek exposure to risky assets in October. While emerging markets equity and bond funds continued to be most popular, several European equity and bond Morningstar Categories were hit by outflows. These two trends have been ongoing for the better part of this year.

“In a more recent turn of events, investors flocked to inflation-linked bond funds as government bond yields ticked upward in October; simultaneously, redemptions out of euro government bond and euro diversified bond funds accelerated. This indicates that investors were mindful of bond risks well before the ‘Trump Tantrum’ kicked in after Donald Trump’s election as US president, which came as a surprise for most observers.”

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