Multi-asset funds, long/short multi-strategy funds and flexible bond funds were the top-sellers in Europe over the last three years, receiving combined net inflows of €468.5bn, according to Morningstar data.
This number accounts for more than half of the total net inflows into Europe-domiciled investment funds (including ETFs) between July 2014 and June 2017, an analysis of the data by our sister publication Expert Investor found.
EM debt hits new high
But it is where has the rest of the money has that is more surprising.
Over the past three years, emerging market debt funds have seen total net inflows of €52.2bn, only some €13bn less than inflows into unconstrained/flexible bond funds.
During the previous three-year period, EM debt inflows were of a similar size, meaning that total net inflows have now reached almost €100bn over the past six years.
This undermines claims by some that emerging market debt inflows by Western investors have yet to pick up.
Three-year net inflows into investment-grade developed market corporate bonds fell just short of those into emerging market debt funds, reaching €50.4bn with inflows roughly split equally between active and passive funds.
Inflows into developed market government bond funds still top €4.5bn over three years, though they have dropped into negative territory this year.
So the long-awaited ‘Great Rotation’ has certainly not started yet: net flows into fixed income were more than three times as high as those into equities, and absolute return and multi-asset funds saw almost nine times as much money flowing in.
See the next page for more on the asset classes that have seen the biggest outflows in recent years.