GLOBAL - Equity funds hit a record high in November as investors responded to the end-year index rises, according to FERI Fund Market Information.
FERI said that the rises were similar to those seen in September, but with the overwhelming dominance of stock fund volumes.
Equity inflows of €18.6bn were a good 23% above their earlier peak, and a pent-up appetite for returns meant that money market sectors were systematically shelved in favour of any product that offered some level of exposure to the stock markets.
More cautious investors bought balanced and guaranteed funds, as well as funds of funds, while the more adventurous opted for Japan.
German investors – mainly institutions – continued their heavy weighting in fixed income funds, posting their strongest monthly inflows of the year at €4.3bn.
The other big buyer of fixed income was Switzerland, with an inflow of €1.2bn.
Elsewhere, fixed income investment was seen to shrink. This was the fourth consecutive month of decline for the fixed income category, and this seems likely to continue, given the backdrop of rising stock markets and fear of interest rate rises by the European Central Bank.
FERI said that November also brought new vigour to the balanced sector which had been out of favour since the collapse in investor confidence in 2000. The past three years have seen redemptions totalling €21bn but the introduction of UCITS III, allowing absolute strategies, had helped to reinvigorate the sector to produce year-to-date inflows of nearly €19bn in 2005.
The best-selling sectors in November were equity Japan, with €4.3bn-worth of sales, equity Europe (€3.2bn) and equity North America (€2.8bn).
The bottom sectors were money market euro, which posted net redemptions of €4.2bn and money market US$, which net outflows of €2.5bn.
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