European Investors Nervous Over Stock Funds

by Philip Morton, Investors Offshore.com

23 April 2002

A Wall Street Journal report has revealed that jittery European fund investors pulled around $100 million out of stock funds in February of this year.

A survey conducted by the newspaper of mutual fund associations in Italy, France, Spain, Germany, Switzerland, and the UK, showed that the rush of small net outflows followed net inflows of $2.7 billion in January. According to analysts, however, individual investors began to creep back towards stock funds in March, and the results for the first half of April were also optimistic.

'On the whole, retail investors continue to buy money-market funds, with the asset allocations remaining high relative to recent history,' Moneesh Puri, an analyst with Salomon Smith Barney, told the WSJ.

Attempting to explain February's mini-exodus, he added: 'Past experience suggests that it will take a period of sustained positive performance from the equity market before they consider switching back to equities.'

According to the Wall Street Journal survey, although there were significant outflows from stock funds throughout Europe in February, investors in Italy and Switzerland were the worst affected by nerves, and dragged the overall figure down somewhat.

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