European investors have piled back into fixed income and equity funds, with both asset classes enjoying their best inflows for months.
According to Morningstar's European Asset Flows data for January, equity funds received their highest inflows since this time last year, with €25.3bn flowing into the market across active and passive offerings.
DIY investment assets shrink 8% in 2022
Fixed income funds fared better still, as €33.7bn of net inflows helped record its best month since July 2021, while passive bond funds chalked up their best month ever.
ESG continued to prove popular in Europe, with both Article 8 and Article 9 funds attracting net new assets. Article 8 funds were boosted by €24bn and Article 9 funds enjoyed €2.6bn of net inflows.
However, the good news did not spread across the full market, and many of the recent winners found themselves in the red for January.
Following a run of positive flows, money market funds began to shed cash, with €9.5bn leaving the asset class after its stellar final quarter of 2022, which saw it take in €183bn.
Ultra-short-term bond funds denominated or hedged into euros also suffered, as €3.2bn was withdrawn by investors, while commodities lost €689m over the month.
By house, Eurizon took the heaviest losses, as €2.2bn was withdrawn from the manager, followed by Ruffer, from which investors took back more than €1bn.
On the reverse, iShares topped the list of asset-gatherers, enjoying €10bn of inflows when money market funds were excluded, while Pimco came in second spot.
Across the board, Europe-domiciled long-term funds enjoyed a positive month, with a net €54bn entering the market, the best month since December 2021. This left the market at €10.7trn, up from December's €10.35trn.
2022 European flows fall to lowest level since 2008
Valerio Baselli, senior international editor at Morningstar, said: "After a forgettable 2022, the new year is off to a good start for the European asset-management industry. Investors showed a positive sentiment and took advantage of the attractive valuations of equity and bond markets, pouring €54.1 billion into long-term Europe-domiciled funds during January 2023, marking the best monthly result in terms of flows since December 2021.
"Overall, stock markets started 2023 on a strong footing, with gains across global equities, upon expectations that the pace of interest-rate rises would ease as inflation starts to cool.
"China's reopening after dropping the zero-COVID policy in late December also helped propel the advance."
