Informa Intelligence
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FUND FLOWS: The Top Questions Heading Into 2018

Flows say investors see the glass half full next year.

The final week of November found investors weighing a number of important questions as they look ahead to 2018. Republicans have since passed a tax reform bill and the U.S. Federal Reserve’s next move on interest rates seems clear. But most are not so easy to answer. Will China successfully keep its domestic credit markets in check and limit environmental damage while maintaining economic growth? Has populism shot its bolt in Europe? Will oil prices stabilize at the higher levels they have climbed to? Will North Korea take a step too far in its confrontation with the United States?

Fund flows during the week ending Nov. 29 suggest that investors are more inclined to see the glass as half full. Europe, U.S., Korea and China Equity Funds recorded solid inflows, as did Emerging Markets Equity and Bond Funds. Redemptions from High Yield Bond Funds moderated and Municipal Bond Funds attracted fresh money for the 19th time in the 22 weeks since the beginning of July.

Overall, EPFR-tracked Equity Funds collectively took in another $7.8 billion, Bond Funds absorbed a net $5.3 billion and flows into Money Market Funds topped $28 billion with U.S. Money Market Funds, recording their biggest weekly inflow since the fourth quarter of 2013.

When year-to-date flows are broken down by major currency groups, European and emerging markets investors have committed significant sums to Balanced and Alternative Funds (categorized as “Other”) while Developed Asian investors favor Equity Funds and U.S. investors have driven the record-setting flows—over $575 billion with a month to go—that have gone into Bond Funds this year.

At the single country and asset class fund levels, flows into Mexico and Australia Equity Funds climbed to 51- and 178-week highs, respectively, and France Bond Funds recorded their biggest inflow in nearly five months while redemptions from South Africa Equity Funds hit levels last seen in early March. High Yield Bond Funds extended their longest outflow streak since the start of 2016 and Mortgage Backed Bond Funds had their longest inflow streak since a 23-week run came to an end amid the third quarter of 2016.

 

Fund flow data provided by EPFR Global, an Informa Financial Intelligence company.

 

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