Funds investing in stocks of European companies saw their highest level of withdrawals in almost a year, according to a recent analysis by Bank of America (NYSE:BAC).
It has been documented that investors withdrew a significant $2.4 billion from these funds, the twelfth consecutive week of net withdrawals and the largest amount withdrawn in a single week since October of the previous year, according to the bank’s statement.
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Bank of America said the measures resulted in a total withdrawal of $37.4 billion from funds focused on European companies’ stocks since the start of the year.
Moreover, the majority of these recent draws have occurred in actively managed funds, which have seen $1.66 billion withdrawals – the highest level in seventeen weeks – while index-tracking funds have seen $0.73 billion exit, only the second time this has happened in the past six weeks.
Bank of America noted that although undervalued stocks and shares in Swiss companies saw modest inflows of $0.16 billion and $0.13 billion, respectively, other sectors faced difficulties.
Sectors such as banking, the UK and stocks expected to grow rapidly were the hardest hit, with total withdrawals of $0.62 billion, $0.54 billion and $0.26 billion respectively. It is important to note that no industry achieved a net inflow of funds during that week.
According to Bank of America’s analysis, their pattern cycle model currently indicates a ‘recovery’ phase as of August 2024. However, the index that combines the different economic signals of Europe was in a downtrend.
The bank notes that this downward movement is likely to change the market to a ‘recession’ phase the following month if the current trend does not change.
The bank interprets these trends as indicating growing caution among investors regarding funds investing in European equities, reflecting broader concerns about the economic situation across Europe.
Given that no industry sector is seeing net inflows, and large drawdowns persist, Bank of America’s assessment is that market sentiment is trending away from Europe due to prevailing uncertainties.
This article was produced and translated with the help of artificial intelligence and reviewed by an editor. For more details, please refer to our Terms and Conditions.
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