European-focused equity funds experienced their largest outflows in nearly a year, according to a recent note from Bank of America (NYSE:BAC).
Investors reportedly withdrew a substantial $2.4 billion from these funds, marking the 12th consecutive week of outflows and the most significant single-week withdrawal since October 2023, the bank said.
BofA explained that this brings the year-to-date outflows from Europe-focused equity funds to a staggering $37.4 billion.
Furthermore, the bulk of the recent outflows are said to have come from active funds, which saw $1.66 billion in withdrawals—the largest in 17 weeks—while passive funds experienced a $0.73 billion outflow, only the second in the last six weeks.
Bank of America noted that while value stocks and Switzerland attracted modest inflows of $0.16 billion and $0.13 billion, respectively, other areas struggled.
Financials, the UK, and growth stocks were hit hardest, with outflows of $0.62 billion, $0.54 billion, and $0.26 billion, respectively. Notably, no sector managed to record inflows during the week.
Bank of America's analysis also highlighted that their Style Cycle model remains in the "Recovery" phase as of August 2024, but the European Composite Macro Indicator has been declining.
They state this downturn could potentially shift the market into the "Recession" phase next month if the trend continues.
The bank says the trends indicate a growing investor caution towards Europe-focused funds, reflecting broader concerns over economic conditions across the region.
With no sector showing inflows and significant withdrawals continuing, BofA believes the market sentiment appears to be shifting away from Europe as uncertainties loom.