European-domiciled long-term funds experienced €6.6bn of net outflows in August, reflecting negative investor sentiment caused by economic uncertainty and inflation not falling as hoped.

Equity funds experienced net outflows totalling €1.3bn last month, the second-worst monthly result since October 2022, according to data from Morningstar. Year-to-date, equity strategies have enjoyed inflows of €19.9bn.

Active funds saw the majority of the outflows, shedding €11.8bn in the period, while passive equity funds attracted €10.5bn.

However, fixed income funds had their tenth positive month in terms of flows, bringing in €1.7bn, although August's figures are down sharply compared to previous period.

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Global stocks fell amid worries over renewed weakness in the Chinese real estate sector, Morningstar analysts said, while at the same time, government bond yields rose, which resulted in prices falling.

Economic data from China also continued to be worse than expected, with emerging markets underperforming their developed peers. China equity and China equity A-shares funds suffered particularly, with both categories shedding €1.1bn each.

On the other hand, US large-cap blend funds attracted €6.4bn in the month, and global large-cap blend equity was again the top seller in August.

Allocation strategies were the biggest detractor of the month, with €2.7bn of net outflows. These funds had only three positive months in terms of flows since May 2022. In August, cautious and flexible allocation in euros that invest globally were the ones hit hardest. 

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Alternative funds had their sixteenth consecutive month of net redemptions, and commodities funds also had a negative month, with €301m lost in August. This mainly owed to the €369m withdrawn from precious-metals products, mostly exchange-traded commodities on gold.

Long-term funds classified as Article 8 shed €10.8bn in August, while Article 9 products attracted €200m in net inflows. The latter group had the highest organic growth rate for the year to date (3.26%), while the former had a 0.10% organic growth rate in the same period.

Following the clients' preference for passives, iShares once again topped Morningstar's list of asset-gatherers, followed by Vanguard and State Street. Pictet, Eurizon, and Fidelity International suffered the largest outflows from individual asset managers.