This is despite the market rallying in the first quarter of this year, with elevated levels of investor confidence and resulting fund inflows.

Money market funds, which cushioned the blow for the European fund industry in the second quarter with inflows of €10 billion, still gave up €19 billion in June, the worst month for the asset class since June 2011.

Dan Lefkovitz, director of fund research operations at Morningstar said: “European asset flows reacted predictably to wobbly markets in the second quarter.

“Investors fled equities and sent capital to money markets and fixed income-especially corporate and non-euro debt. Passive funds were among the winners of the second quarter, showing the importance of low costs in a low-return environment.”

Key findings from Morningstar’s report on June fund flows:

• Equity funds were the hardest hit in the second quarter after enjoying inflows of €3 billion in the first quarter.

European investors withdrew more than €21 billion from the asset class in the second quarter, with €7.5 billion of those redemptions occurring in June.

The Asia ex-Japan equity category saw outflows of €2 billion in the second quarter after attracting roughly €1.2 billion in the first three months of the year.

• Investor appetite for bond funds remains insatiable, with fixed-income funds collecting inflows of nearly €9 billion in June to reach more than €21 billion for the second quarter.

Europe’s most popular bond fund for the quarter was Alliance Bernstein American Income Portfolio, which enjoyed inflows of €2.1 billion.

• Europe’s five largest long-term funds all enjoyed inflows in June, and all but the largest, Templeton Global Bond, had net inflows in the second quarter.

PIMCO GIS Global Total Return’s strong second-quarter inflows of €2 billion pushed its asset base above the €20 billion threshold. This is on top of the $263 billion asset base in the fund’s U.S. version.

• Allocation funds continue to benefit from uncertainty and investor focus on capital preservation over return maximization, with roughly €2.5 billion flowing to the broad asset class in the second quarter.

Carmignac as a house has benefitted from interest in asset allocation.

• Several passively managed funds, led by Vanguard FTSE UK All Share Index with inflows of €859 million, were among the top asset-gatherers in June. Passive funds are likely benefitting from the move away from adviser rebates in the UK market.

But healthy inflows to passive UBS funds and the strongest month on record for KLP AksjeGlobal Indeks show the trend extends beyond the UK. Investors are increasingly focused on controlling fees in a low-return environment.