Corporate credit is expected to gain popularity in Europe over the next 12 months at the expense of money market funds and other asset classes, says Fitch.

Just over half of investors surveyed in the rating agency’s latest fixed income survey believe that flows to corporate bond funds will increase in 2012, while only 6 per cent say the same thing about government bonds. The investment managers in the survey represent a total of $7.1 trillion of fixed income assets, according to Fitch.

One in five of respondents believe that asset managers will take their money out of the asset class altogether. While one in ten regard higher yielding segments as the likely destination, just 5 per cent opted for gold and cash.

Non-euro bond funds were one of the most attractive choices when investors slashed their exposure to equities in 2011. According to data from Lipper, bond funds saw inflows of nearly €100 billion last year compared with outflows of €125 billion in equities.

Money market funds saw outflows of €131.6 billion in 2011, and Fitch believes that the trend is set to continue. “The drop reflects caution over the European sovereign debt crisis as money market funds have eliminated their exposure to banks from Spain and Italy,” Fitch said in a statement.

“While we note that funding conditions for European banks have improved since the European Central Bank initiated its three-year lending programme, this has not led money market funds to reinvest in banks from countries that have been hardest hit by the crisis,” the ratings agency said.