U.S. investors switch out of Europe as recovery bet sours
reuters.com – 15/08/14
U.S. investors are withdrawing billions of dollars from European stocks as signs of a stalled economic recovery, compounded by the Ukraine crisis, halt the past year’s scramble to buy back into the region. The switch out of Europe into emerging markets or the United States is not yet a wholesale exit, with several large asset managers trimming rather than axing their exposures to the region – a far cry from the panic of 2011 at the height of the euro zone debt crisis.
But the rapid pace of outflows from easy-to-trade vehicles such as exchange-traded funds, often seen in the past as an indicator of future investor sentiment, may derail Europe’s two-year equity rally, with investors growing impatient for the European Central Bank to act more radically to spur growth. Lipper data for 106 U.S.-domiciled funds invested in European equities shows their longest streak of consecutive weekly outflows since 2011 in the nine weeks to Aug. 14. Over that period, investors withdrew $3.25 billion from the funds’ nearly $50 billion assets, mostly held in ETFs. Read More