The third quarter ended in much better shape than the second with €91bn flowing into long-term funds during the period (including passives), compared with just €14bn in the second quarter and redemptions in the first. It has been a year of political and macro-economic uncertainty that has inevitably been mirrored by sales volatility. Despite the recent months of ebullience, there are signs of creeping fatigue particularly in the bond sectors, which have been the accelerant of the recent investment surge. September volumes fell back by nearly half August’s pace and activity in other sectors, particularly improved mixed asset flows, failed to compensate. Core Euro bond sectors acted as a drag on fixed income sales totals but so did a number of previously popular high yield sectors. Their sensitivity to US central bank policies points to fears of a rate rise before the end of the year, which would lead to a reversal of fortunes for fixed income funds.
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