Open-end mutual fund inflows in Italy deteriorated sharply in March 2026, as rising risk aversion and a worsening geopolitical environment pushed investors towards liquid and defensive instruments, a trend that Prometeia’s nowcasting models suggest will persist, albeit with modest improvement, into April.
According to monthly data from Assogestioni, net inflows into open-end mutual funds fell to -€4.4bn in March, a marked deterioration following the already negative, though smaller, figure recorded in February. The scale of outflows exceeded what nowcasting models had projected (-€2.7bn), though the models did correctly identify the directional shift across all major asset classes and the pivot towards lower-volatility instruments. The bulk of the outflows were concentrated in Italian-registered funds (-€5.3bn), while foreign funds provided a partial offset (+€0.9bn), a divergence that may reflect both greater exposure of domestic products to tactical rebalancing and a more diversified foreign offering oriented towards liquid, defensive, and global solutions, Prometeia said.
The broader backdrop was one of pronounced risk aversion. Geopolitical shocks in the Middle East and mounting tensions in the Strait of Hormuz triggered widespread equity market corrections, pushed energy prices higher, and lifted inflation expectations alongside government bond yields. In response, both the Federal Reserve and the European Central Bank adopted a more cautious stance than markets had previously anticipated, reinforcing investor unease.
This environment was clearly reflected in fund flow patterns, it said. Money market funds stood out as the only asset class to record meaningful positive inflows (+€2.7bn), reaffirming their role as a holding pen for liquidity during periods of elevated uncertainty. Bond funds posted a modest net outflow of -€0.7bn, snapping a positive run stretching back two years. However, Prometeia cautions against reading this as a structural retreat from fixed income; with year-to-date flows still in positive territory and interest rate levels remaining relatively attractive by historical standards, March’s figure is more plausibly interpreted as a tactical pause following the sharp rise in 10-year yields and inflation expectations, which temporarily penalised longer-duration strategies.
Equity funds also closed the month in negative territory at €1.6bn, broadly consistent with the sentiment deterioration and risk repricing, though the limited scale of outflows suggests investors were reluctant to drastically reduce equity exposure even during the correction, Prometeia noted.
The hardest-hit segment was multi-asset products, and balanced funds in particular, which recorded -€4.0bn in outflows. The simultaneous pressure on both equities and bonds undermined these instruments’ stabilising function at precisely the moment investors needed it most. Flexible funds extended their weakness with a further -€0.8bn, continuing a negative trend that has persisted over the past year and underscoring the broader difficulties facing strategies reliant on management discretion in an environment dominated by exogenous shocks and monetary policy uncertainty.
Looking ahead, Prometeia’s April 2026 nowcast points to continued, though somewhat reduced, outflows, with net inflows estimated at approximately -€3.2bn.
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