Cautious investors return to Europe equity funds-EPFR

By Walter Brandimarte

NEW YORK, Nov 28 (Reuters) - Cautious investors continued to pile cash into money-market funds last week but risk appetite has been slowly returning, resulting in inflows into European equity funds, EPFR Global said on Friday.

Money-market funds, the preferred investor option for times of uncertainty, still attracted $26 billion in net inflows during the week ending Nov. 26, said the Boston-based company, which tracks global funds with some $10 trillion in total assets.

Riskier European equity funds also got $1 billion in inflows during the same period, in a sign that investors might be getting close to the bottom of the market, EPFR's global markets analyst Cameron Brandt told Reuters.

"Investors are still piling up most of their spare cash in money-market funds, but outflows (from equity funds) have been pretty subdued relative to the market performance," Brant said.

"There has been some cautious buying. Money is started to come back to global emerging market (equity) funds, to Europe funds."

In the previous week, money-market funds had drawn inflows worth $37.1 billion. The highest net inflow into the category was in the week ending Oct. 15, worth $44.4 billion.

Bond funds remained under pressure, however, as investors worry about the huge amount of debt being issued by governments to rescue their economies.

Both global bond funds and U.S. bond funds post outflows of more than $1 billion in the past week, according to EPFR data.

The huge amount of government debt reaching the market not only pumps up the supply of bonds but also "have the potential to create fresh bubbles and inflation down the road," Brandt said. (Editing by Tom Hals)