Schroder Salomon Smith Barney (SSSB) research has found European investors are continuing to favour ...
Schroder Salomon Smith Barney (SSSB) research has found European investors are continuing to favour equities over bond funds.
In the 12 months to 3 August 2000, European investors have been net sellers of $88bn of bonds but net purchasers of $150bn of equities
Equity fund inflows in the first half of 2000 amounted to $90bn and have surpassed the 1999 total.
The rolling 12-month demand for equities has reached a record level in excess of $150bn, according to SSSB.
It expects the retail sector to continue to switch out of bonds, encouraged by annualised returns of more than 20% on European equities over the past three years. It predicts this trend should support the market in Europe over the next 12 months.
Net flows into equity funds have been steadily increasing in direct proportion to market performance since early 1996.
Both net flows into equity funds and market performance rose sharply in January 1997 and have remained high ever since, reaching a peak in February of this year.
Demand for domestic and foreign equity funds has stabilised. SSSB estimates a total demand for equity mutual funds in excess of $80bn this year; net flows reached a peak of $22bn in February.
European equity weightings remain low by UK and US standards, according to SSSB, with the equity portion in European mutual funds typically coming in at around 40%.
Overall, Germany, France and Italy account for 60% of total mutual funds under management on the continent. SSSB believes inflow of funds is having a positive effect on the domestic equities of Finland, France, Germany, Italy, Spain and the UK. The Netherlands, Norway, Sweden and Switzerland are rated as neutral.
Total European mutual fund assets now amount to more than $3.5 trillion. Germany, France and Italy account for 60% of the total.
A recent trend noticed by SSSB is that the weak euro has discouraged international in-vestors from buying Eurozone equities. The rise in mutual funds assets under management has been striking over the past few years. Germany has gone from $299bn in 1994 to $768bn in 1999, while Italy has gone from $81bn to $476bn over the same period.
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