European investors allocated over €50 billion to long-term funds in the first quarter. More than 70% of that capital went into fixed-income products, according to Morningstar’s latest asset flow data.
Bond funds collected €37 billion during the period, significantly exceeding other asset classes. Equity funds experienced net redemptions in March and only minor inflows for the quarter, reaching just over €2 billion.
Corporate debt and emerging markets lead bond inflows
The increase in fixed-income demand was primarily fueled by corporate debt, high-yield bonds, and emerging-market debt funds. BlackRock and PIMCO were among the largest recipients, gathering €3 billion and €5.5 billion respectively.
BNP Paribas recorded its strongest quarter since 2009, with €7.6 billion in new investments. Amundi also performed well, drawing €5.2 billion in March—its highest monthly figure in years.
Equity funds lagged behind. Emerging-markets and income-focused strategies performed relatively better, though firms like Fidelity and DWS faced withdrawals. Aberdeen Global Emerging Markets led the category with €1.5 billion in new money, while M&G Global Dividend and Templeton Asian Growth each secured nearly €1 billion.
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The Global Emerging Markets Allocation category experienced the fastest growth among sizable segments, with organic inflows climbing 34%.
March sees equity outflows, money markets rebound
Long-term funds absorbed €16 billion in March, with fixed-income products again taking the largest share at nearly €14 billion. Equity funds, however, saw net redemptions of €1.3 billion—the biggest outflow for any asset class that month.
Money market funds reversed their earlier decline, attracting over €10 billion and returning to positive territory. The change indicates investors may be prioritizing safety amid ongoing economic uncertainty, though the data does not clarify their exact reasoning.
Dan Lefkovitz, part of Morningstar’s European research team, explained that the bond surge aligns with a broader global pattern rather than confidence in the Eurozone. “Investors are distinguishing between struggling governments and profitable companies,” he said, “and between indebted developed markets and cash-rich emerging ones.”
Of the quarterly inflows into fixed-income offerings, those focused on corporate debt, corporate high yield, and emerging markets dominated.
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