Bond funds drove high fund inflows in the second quarter, with some investors expecting opportunities to gain capital appreciation from bond prices as interest rates come down.
The European Fund and Asset Management Association (Efama) recorded €208 billion of inflows worldwide into fixed income, an increase from €137 billion in Q1.
The US, China and Europe recorded the highest level of net sales – €44 billion in the case of Europe, which was lower than the other two regions.
Bernard Delbecque, senior director for economics and research at Efama, said expectations that inflation would decline was a factor behind the drive for bond funds, as this would “open the door to a more stable interest rate environment and potential capital appreciation”.
For others, the current high level of interest rates, which yield a decent income, was the attraction.
Overall, net assets of worldwide investment funds increased by 3.2% in euro terms – reaching €64.4 trillion, or US$70 trillion.
Broader fund flows for worldwide long-term funds recorded net inflows of €149 billion, compared to €123 billion in Q1 2023. The Asia-Pacific region experienced the highest net inflows (€111 billion), followed by the US (€64 billion) and Europe (€1 billion).
However, global equity funds recorded net outflows of €27 billion, compared to net inflows of EUR 5 billion in Q1 2023. The bulk of net outflows occurred in Europe.
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