Informa Intelligence
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FUND FLOWS: Investors look to Europe, Emerging Markets in Wake of Geopolitical Shocks

New money flowing into European equity funds hit a 67-week high, while emerging market bond funds took in fresh money for the 11th straight week.

The week ending April 12 saw U.S. cruise missiles hitting Syria, a U.S. carrier task force sailing towards the Korean peninsula and France’s presidential campaign entered the home stretch. It also saw flows into EPFR Global-tracked Europe Equity Funds hit a 67-week high, Emerging Markets Bond Funds take in fresh money for the 11th straight week, Korea Equity Funds record their largest weekly inflow since late November and redemptions from France Equity Funds jump to their highest level in six months.

While geopolitical issues dominated the headlines, U.S. investors were also facing the deadline for paying their 2016 tax bills, bracing for the 1Q17 corporate earnings season and digesting the implications of the Federal Reserve’s desire to shrink its over $4 trillion balance sheet. U.S. Money Market Funds recorded their fifth straight weekly outflow while commitments to Municipal Bond Funds soared to their third highest total on record.

With all of these variables in play, EPFR Global-tracked Bond Funds recorded a collective inflow of $6.1 billion during the second week of April while Equity Funds absorbed a net $6.2 billion and Money Market Funds posted outflows of just over $5.5 billion. Europe Money Market Funds extended their longest run of inflows in over a decade while Japan Money Market Funds, which have defied predictions they would go extinct in the wake of last year’s adoption of negative interest rates by the Bank of Japan, ran their current outflow streak to five weeks and $6.4 billion.

 

At the single country level, Spain Equity Funds recorded their second biggest inflow since 2Q15 and Spain Bond Funds their largest outflow since the second week of January. Brazil Equity Funds experienced net redemptions for the third time year-to-date and Thailand Bond Funds extended their longest run of inflows since 1Q16.

Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.

 

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