The European mutual fund industry experienced net outflows of €1.4bn ($1.6bn) from long-term mutual funds for December, according to Lipper.

In the rough market conditions mixed-asset funds (€11.6bn) and property funds (€0.3bn) were the only asset classes with net inflows. Bond funds (-€5.7bn) and equity funds (-€5.4bn) as well as “other” funds (-€1.4bn), commodity funds (-€0.5bn), and alternative/hedge products (-€0.3bn) suffered net outflows for December.

The outflows for December brought down the full year net inflows to €348bn. In line with the long-term products, money market products also faced net outflows for December; money market funds posted outflows of €17.6bn, whereas enhanced money market funds enjoyed small net inflows of €0.03bn. 

These flows drove down the full-year net inflows for 2014 to money market products to €19.6bn. According to the overall net flows, asset allocation (€7.4bn) was the best selling sector with regard to long-term funds, followed by bonds EUR corporate investment-grade funds (€3.3bn) and bonds euro funds (€3.3bn). 

At the other end of the spectrum bonds US dollar corporate high yeild funds suffered net outflows (-€4.5bn), bettered somewhat by bonds global high yield funds (-€3.2bn) as well as equities Germany funds (-€2.1bn) and bonds emerging markets in local currencies funds (-€2bn). 

Early indicators for January activity suggest that Luxembourg- and Ireland-domiciled long-term mutual funds, bond funds, with projected net inflows of around €11.0bn, should be the best selling asset class for January, followed by mixed-asset funds (+€7.6bn) and equity products (+€5.5bn). Even though these numbers are estimates, it seems European investors are back in a risk-on mode and are buying back into equity funds.