Globe and money

Retail flows into global and high yield bond funds hit highest level since Q3 2013

Flows into – and out of – EPFR Global-tracked equity and bond funds during the seven days ending 19 February stuck largely to the previous week’s script.

Japan, US and Europe equity funds again attracted solid amounts of fresh money while redemptions from emerging markets equity and bond funds continued to moderate. One difference, however, was the level of retail interest, especially in some bond classes.
 
Retail commitments to all equity and bond funds climbed to five and 13 week highs respectively and hit levels for global and high yield bond funds last seen in 3Q13. Europe equity funds attracted retail money for the sixth straight week, the longest such run since 4Q06, and Japan equity funds for the eighth week in a row.
 
Overall, equity funds took in another USD13.3bn during the third week of February and bond funds USD2.58bn while USD44.5bn flowed out of money market funds. Redemptions from emerging markets equity funds were the lowest in five weeks while dividend equity funds snapped a two week losing run with their biggest weekly inflow since late November.
 
At the country level UK, Spain and Italy equity funds again enjoyed solid inflows while Turkey and Vietnam equity funds added another week to their current inflow streaks. On the other side of the ledger, the list of country fund groups yet to post inflows so far this year includes Russia and India equity funds and Australia bond funds.
 
For the second week running outflows from EPFR Global-tracked emerging markets equity funds halved, dropping from USD3bn during the week ending 12 February to USD1.5bn as redemptions from the diversified global emerging markets (GEM) equity funds fell to their lowest level since mid-November. Asia ex-Japan and EMEA equity funds recorded the biggest outflows among the four major EM fund groups. In the case of Asia ex-Japan E equity funds, local investors played a significant role in the week’s outflows with renminbi-denominated redemptions from China equity funds hitting a 24 week high and won-denominated redemptions accounting for nearly all of the outflows recorded by Korea equity funds s. Year-to-date, however, China equity funds are still in positive territory.
 
For the second week running all four of the major EPFR Global-tracked developed markets equity funds groups recorded outflows ranging from USD1bn for global equity funds to USD8.2bn for US equity funds. YTD flows into all developed markets equity funds still lag last year’s pace: they currently stand at USD44.2bn compared to USD57.9bn for the same period in 2013. This is not true, however, for Europe equity funds which have taken in over USD24bn YTD versus USD5bn at the same point last year.
 
Healthcare/biotechnology sector funds topped the list of EPFR Global-tracked sector funds for the third week running during the week ending 19 February as the average gain for this fund group since the beginning of 2012 moved north of 90 per cent. That is almost double the gain racked up by second placed financial sector funds, which have posted inflows five of the past eight weeks as fears about the impact of the US Federal Reserve’s winding down of its current quantitative easing program have – at least in the US – moderated. Real estate sector funds have also seen flows rebound: their current inflow streak stands at six straight weeks.
 

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