European ETF's have experienced the longest spate of uninterrupted selling since 2008, according to UBS.

A research note from the Swiss bank this week shows that there has been $10bn in net outflows for the vehicles (excluding UK ETFs) since the end of January.

The net selling is the worst 'continuous phase' since the infancy of European ETFs in 2008, statistics show.

‘Political risk is heating up as we get closer to the UK referendum,” said Karen Olney, a London-based strategist at UBS.

“Plus investors are fed up that European earnings have not grown in over 10 years.”

The negative sentiment is across the board too, with local investors and US investors selling.

A ‘three-legged crisis’ – financial, sovereign/austerity and commodities is hurting the European vehicles, UBS added.

Meanwhile European credit saw inflows of close to €6bn over the same period. High yield also attracted new money.

Hedge funds lose faith

Back in February hedge fund net leverage fell to 2009 lows (27%) and looked ripe for a bounce back.

But UBS stats show leverage - essentially investing with borrowed money - has fallen further today, to below 2009 levels to a mere 23%, something akin to the all-time lows seen at the peak of the euro crisis.

“We were surprised to see it fall even further,” Olney added.

“This level is more in line with the peak of the euro crisis right before Draghi vowed to rescue the euro.

“This is significant and if it falls much further it begs the question: will hedge funds be able to do much business?"