Hopes that recent economic data and the bogging down of President Donald Trump’s agenda will keep U.S. interest rates in check for the remainder of the year helped EPFR-tracked Real Estate Sector Funds post their biggest inflow in six weeks going into August while flows into Financial Sector Funds slipped to a five-week low. But the uncertainty generated by the Trump administration’s lack of progress is weighing on a number of other sectors and the funds that invest in them.
The week ending Aug. 2 saw Healthcare/Biotechnology Sector Funds experience their heaviest redemptions since late January, Technology Sector Funds’ three week run of inflows come to an end and Infrastructure Sector Funds post consecutive weekly outflows for only the second time since Trump’s election victory last November.
U.S. Real Estate Sector Funds were not the only ones to see flows rebound in early August. The Eurozone’s recovery has improved the outlook for European real estate and the sector in Japan is feeling the benefit of the Bank of Japan’s extraordinary efforts. Europe Regional and Japan Real Estate Funds posted their biggest inflow in 18 and 24 weeks respectively. Asia ex-Japan Real Estate Funds, meanwhile, extended an inflow streak stretching back to late February. But flows dropped off sharply during a week when Korean authorities announced proposed measures to cool that country’s real estate market.
Enthusiasm for Healthcare/Biotechnology Sector Funds has been cooled by the uncertainty surrounding healthcare reform in the U.S. and by the lack of progress on promised tax reforms that, among other things, would encourage US companies to repatriate earnings held overseas and–it was hoped–use the money for mergers and acquisitions, share buybacks and new product development.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.