Investors Head for Stocks – Report

Stephen Harris

17 January 2006

Global equity funds are proving increasingly popular with investors as equity markets show strong growth, according to FERI Fund Market Information. FERI said equity funds hit a record high in November with inflows totaling €18.6 billion ($22.5 billion), 23 per cent above their earlier peak. More cautious investors bought balanced and guaranteed funds, as well as funds of funds, while the more adventurous opted for Japan. German investors continued their heavy weighting in fixed income funds, posting their strongest monthly inflows of the year at €4.3 billion. The other big buyer of fixed income was Switzerland, with an inflow of €1.2 billion. But elsewhere, fixed income investment was on the decline, with the FERI research showed the fourth consecutive month of decline in November for the fixed income category. FERI said that November also brought new vigour to the balanced sector which had been out of favour since the collapse in investor confidence in 2000. The past three years have seen redemptions totalling €21 billion but the introduction of UCITS III, allowing absolute strategies, had helped to reinvigorate the sector to produce year-to-date inflows of nearly €19 billion in 2005. The best-selling sectors in November were equity Japan, with €4.3 billion-worth of sales, equity Europe (€3.2 billion) and equity North America (€2.8 billion). The bottom sectors were money market euro, which posted net redemptions of €4.2 billion and money market US$, with net outflows of €2.5 billion.