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European Funds Suffer Worst Outflows in Sept.


A record $156.5 billion was withdrawn from mutual funds in Europe, according to the Lipper FMI report. All asset classes suffered net withdrawals.

Around the world, the mutual fund industry is struggling to maintain investors' faith.

Even European money market funds lost assets in September, declining by $59 billion, for much the same reason as the $200 billion run on money market funds in the U.S. in the final two weeks of September; hearing about the demise of Reserve Funds' flagship Primary Fund due to its $785 million exposure to Lehman Brothers paper that became worthless overnight, European investors stampeded out of the funds.

Even European bond funds saw redemptions, of $28 billion.

"The European fund industry was not alone, although its pain was much more intense," Lipper said.

In the U.S., the combined assets of the nation's mutual funds decreased by $959.33 billion, or 8.3%, to $10.631 trillion in September, according to the Investment Company Institute's official survey of the mutual fund industry.

Stock funds posted an outflow of $56.15 billion in September, compared with an outflow of $19.71 billion in August. Among stock funds, world equity funds posted an outflow of $22.48 billion in September, versus an outflow of $17.41 billion in August. Funds that invest primarily in the U.S. had an outflow of $33.67 billion in September, versus an outflow of $2.30 billion in August.

Bond funds had an outflow of $898 million in September, compared with an inflow of $7.87 billion in August. Taxable bond funds had an outflow of $274 million in September, whereas they took in $5.45 billion in August.

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