Lethargic French money markets are holding back the European fund industry which otherwise enjoyed inflow not seen since 2006, reports Lipper.

Last month investors fed €31 billion ($46 billion) into European funds, resulting in a third quarter sales total of €93 billion, the highest total since the first quarter of 2006. Equity accounted for half of all ex-liquidity inflows - €14 billion - with bond and mixed asset funds making up the other half, Lipper said.

However, including money markets the monthly sales volume dropped to a mere €2.3 billion, owing to a liquidity outflow of €21 billion in the French market.

According to Lipper, French activity is governed by a “lunar-like liquidity cycle” in which September is a trough. However, an outflow of €20 billion this September was the worst since Lipper’s records began.

Among sectors, corporate investment-grade businesses remains the best choice for fixed income. In Lipper’s rankings mixed assets follow, with European, global and emerging market equity sectors - the choice of mainstream retail investors - now close behind.

European stock exchanges rose again in September. Russia recorded the greatest rise of 15 per cent, overshadowing the 5 per cent growth seen by most bourses.