Money market funds still popular with investors as open-ended fund assets grow in second quarter

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Investors continued to prefer “safe haven” money market funds as they shifted assets back into all types of open-ended funds in the second quarter, buoyed by a strong recovery in global financial markets, according to data compiled by The European Fund and Asset Management Association (EFAMA).

The latest International Statistical  Release  showed worldwide  regulated  open-ended  fund  assets  increased  by  9.8  per cent  to  EUR51.7  trillion  in  the second quarter of 2020, with net cash flow to all funds reaching EUR818 billion, compared to EUR 617 billion in the first quarter of 2020.

The largest markets, the United States and Europe, increased the most, with net asset growth of 14.4 per cent and 9.2 per cent respectively.

Low-risk money  market  funds  remained  in demand as uncertainty around the course of the coronavirus pandemic persisted into the second quarter, and attracted  EUR 441 billion in net new money in Q2 2020, almost half of the EUR 829 billion they drew from investors in the first quarter.

Bernard Delbecque, senior  director  for  Economics  and  Research,  commented:  “The  large  sums  invested  in  money  market  funds  during  the  second  quarter  signal  that  investors  around  the  world  remained cautious about the Covid-19 risks.”

Nevertheless, sales of long-term funds noticeably rebounded, with inflows of EUR377 billion in the second quarter, more than compensating for outflows of EUR 213 billion that were seen in the first quarter. Most of these inflows went towards bond funds, which bounced back with EUR 279 billion in inflows as investors reacted positively to new monetary and fiscal policies put in place across the world.

Equity funds also saw inflows of EUR4 billion as investors turned positive again, due to sustained net sales in Japan and Europe, while the United States suffered outflows of EUR72 billion.

At the end of the second quarter, 40.1 per cent of worldwide regulated open-ended fund net assets were held in equity funds, with 20.8 per cent held in bond funds and 16.7 per cent in balanced or mixed funds. Money market fund assets represented 14.1 per cent of the worldwide total.