European Equity Funds Post Biggest Outflow in Six Months

(Bloomberg) -- European equity funds suffered their biggest outflows in 26 weeks as a continuing rally in the euro heightened investor concerns over the region’s exporters.

Investors pulled $1.4 billion from the region’s stock funds, Bank of America Merrill Lynch said in a research report, citing EPFR Global data. That was the second consecutive week of outflows.

U.S. stock funds saw $300 million of inflows, the first in 11 weeks. While this ended the longest streak of outflows since 2004, a net $30 billion has still been withdrawn since the run began in June.

Europe’s reversal in flows is more evidence that investors are worried a resurgent euro will damp a long-awaited earnings revival in the region. The currency rose above $1.20 for the first time in more than two years on Aug. 29, a level that fund managers and strategists had called the “pain threshold.”

Europe’s funds are still sitting on inflows of about $31 billion this year, according to the report, which covered the week to Aug. 30.

Across the regions measured, a series of outflows from high-yield bond funds ended, with about $400 million of inflows recorded. Overall inflows to bond funds in the week reached $8.1 billion.

To contact the reporter on this story: Cormac Mullen in Dublin at cmullen9@bloomberg.net.

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Todd White, Paul Jarvis