European bond funds experienced a fifth straight month of net outflows in May as inflation continued to rise and markets anticipated tightening of monetary policy in Europe and the United States, according to data on 29 countries posted by the European Fund and Asset Management Association, Efama.
Bond funds registered net outflows of 17 billion euro, compared to net outflows of 12 billion in April. Since January, bond funds have experienced total outflows of 80 billion euro. This is the biggest such outflow since Efama started monitoring in 2008. Only two times since bond funds experienced outflows of five consecutive months, totalling 52 and 58 billions at those occasions in 2016 and 2018.
“This is very unusual,” said Bernard Delbecque, senior director economics and research at Efama. “Bond funds are significantly affected by the ongoing tightening of monetary policy.”
Ucits and alternative investment funds, known as AIFs, saw net outflows worth 36 billion euro in May compared to net inflows of 3 billion a month earlier. The total net asset value of Ucits and AIFs decreased by 1.9 percent in May to 20,232 billion euro.
Long-term Ucits funds lead May outflows
Total Ucits outflows amounted to 33 billion in May, compared to net inflows of 300 million in April, Efama said. Most of these outflows, some 22 billion euro, were reported by long-term Ucits funds. Equity funds reported net outflows of 3 billion in May, compared to net inflows of 3 billion in April.
Ucits money market funds recorded net outflows of 11 billion euro, compared to net inflows of 2 billion euro in April. AIFs registered net outflows of 2.9 billion euro, compared to net outflows of 3 billion euro in April.
Efama’s monthly data is based input from 29 European countries: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, and United Kingdom.