In the first week of August, President Donald Trump tweeted that "fire and fury" could be unleashed on North Korea and its leader, Kim Jong-un, if the increasingly nuclear-capable nation keeps threatening the U.S. But against this backdrop of bellicose rhetoric between Trump and Kim, investors opted for steady and diversified when it came to their mutual fund allocations.
Flows during the seven days ending August 9 mirrored the pattern of the previous two weeks, with money market funds attracting the largest share of the fresh money, and global equity funds chalking up the biggest inflows among the major equity fund groups.
Overall, EPFR-tracked equity funds absorbed $6.3 billion during the week, while bond funds took in $9.5 billion and money market funds $46 billion. Flows into all money market funds were the largest since early in the third quarter of 2015, with U.S. money market funds taking in fresh money for the sixth time in the past seven weeks, as they recorded their biggest inflow in over eight months.
Flows to fixed income fund groups again suggested that investors are revisiting earlier assumptions about the pace of monetary tightening in the U.S., as well as the timing of the European Central Bank's exit from its current quantitative-easing program. Flows into mortgage-backed bond funds climbed to a 28-week high, while inflation-protected bond funds recorded their biggest inflow since late February, as investors penciled in a more restrained approach by both central banks.
At the single-country levels, France equity funds took in fresh money for the eighth consecutive week—their longest such run since the start of 2016—and flows into Italy equity funds came in at a 13-week high. Among emerging-markets country fund groups, China equity funds recorded their biggest inflow since the second quarter of 2016. India equity funds posted inflows for the 20th time in the past 22 weeks, and South Africa bond funds extended their longest inflow streak in more than seven years.
Cameron Brandt is director of research for EPFR Global, an Informa Financial Intelligence company.