Winter comes early for Europe equity funds
In mid-August France’s finance minister responded to the latest GDP figures for his country and region by pronouncing growth in Europe to be “broken”. Investors had already come to that conclusion.
Redemptions from EPFR Global-tracked Europe equity funds in the week leading up to the release of second quarter numbers for the Eurozone hit their highest level in over two years while outflows from emerging Europe equity funds climbed to a 27 week high.
Europe’s stalled recovery had the opposite effect on Europe bond funds, which pulled in nearly USD2 billion as investors translated the latest data into further easing by the European Central Bank. But fears that a recovering US economy will push the Federal Reserve to tighten sooner than previously expected kept the pressure on high yield and emerging markets bond funds. In the case of high yield bond funds the pressure came from Europeans reducing their exposure to US junk bonds.
Overall, EPFR Global-tracked bond funds took in a net USD3.75 billion during the week ending August 13 and equity funds attracted USD2.84 billion as institutional commitments rebounded. Money market funds absorbed another USD8.5 billion as they posted back-to-back weekly inflows for the first time since early January.
At the country level funds dedicated to Italy experienced record setting outflows as its economy continues to splutter. But Japan equity funds saw flows surge despite poor 2Q14 GDP numbers and both Germany equity and bond funds enjoyed solid inflows.
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