According to Lipper FMI’s fund flow data across Europe for the period, long-only investors in the UK added €9.5bn net to their pots while asset growth – if it can be called that – was a negative €4.8bn. UK investors were more spooked than most by the ups and downs of the FTSE as well as the coverage given to problems in the US and right across Europe.
Poor performance
We fared better than the manufacturing powerhouse that is Germany whose investors saw €989m of outflows and €3.8bn lost thanks broadly to poor investment performance.
The French saw outflows of €2bn follow outflows of just shy of €5bn in the first quarter of this year, on top of €4.9bn in the last quarter of 2010, and €3.7bn lost thanks to negative performance.
Throughout Europe the equivalent figures are net quarterly sales of €40.5bn in Q2 and negative asset growth of -€22.1bn.
Of the 32 European countries that Lipper FMI reports the data for, only nine have positive asset growth during the period.
In terms of asset classes, global currency and emerging market bonds were the champion asset classes, with net sales for each doubling since the last quarter of last year.
The picture in Asia could not be more different, with Asian investors piling into property funds above what is a relatively even split across the other major asset classes.
Asian picture
Japan remains the largest investor, with asset growth of $11.5bn on net sales of $12.2bn. This is almost totally dominated by property, with outflows in equities, mixed assets and money market funds and $33m of net inflows into hedge funds, and $2.9bn net inflows into bonds and then $12.8bn into property.
The figures show a snapshot in time but the trend is clear – investors are nervous, particularly in Europe and with fresh fears of slowing global economic growth they are likely to remain wary of markets for the next few months, maybe quarters, at least. There is even talk of a double-dip recession in the US which is something the markets have probably not priced in, expecting slow but gradual growth instead.
Safe haven assets will continue to do well in this sort of environment, with gold starting this week at yet another high, knocking hard on the door of $1,900 per ounce. It is also encouraging silver and platinum prices up, with platinum already through the $1,900 barrier, a three-year high.
However, one severe problem for these safe havens is inflation, with UK investors asking themselves whether to believe Mervyn King who is sticking to his guns by saying most of the inflation in the UK is affected by temporary measures including global energy, food and other import prices.
But there is only so much time before they believe “temporary” is actually permanent and while this continues UK investors will continue to be nervous.
