Informa Intelligence
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FUND FLOWS: US Equity Funds Rebound in Wake of Trump’s Shift in Tone

Emerging market funds, however, went net negative in early March, breaking seven weeks of gains.

Benchmark U.S. equities indexes hit fresh record highs in early March as President Donald Trump’s speech to Congress on Feb. 28 hit many of the notes—statesmanlike, inclusive, presidential—that have been conspicuously absent in much of his post-election rhetoric. The shift in tone prompted a broad and positive reassessment of the chances he will steer a significant portion of his reflationary agenda through Congress in the coming months. Flows into U.S. Equity Funds rebounded as they extended their longest inflow streak since mid-December.

For emerging markets, however, the prospect of Trump’s agenda gaining traction added to headwinds building for this asset class, which had already been buffeted by rapidly rising expectations the U.S. Federal Reserve will hike rates again at its next meeting in mid-March, and the downward pressure on oil prices. EPFR Global-tracked Emerging Markets Equity Funds saw a seven-week inflow streak snapped, with Russia Equity Funds among the EM Country Fund groups to stumble.

Overall, EPFR Global-tracked Equity Funds absorbed another $9.7 billion during the seven days ending March 1 while $9 billion flowed into Bond Funds and over $6 billion was redeemed from Money Market Funds. Fund groups with diversified global mandates retained their popularity: Global Equity Funds set a new weekly inflow record, Global Emerging Markets (GEM Equity) Funds were the only major EM group to attract fresh money and Global Bond Funds took in over $1.4 billion for the fourth straight week.

At the country and asset class levels Total Return Bond Funds posted inflows for the eighth time in the past nine weeks and Bank Loan Funds took in fresh money for the 16th straight week. Flows into Sweden Equity Funds hit a 10-week high and Spain Equity Funds extended an inflow streak stretching back to the beginning of the year while Switzerland Equity Funds recorded outflows for only the fifth time since the start of 4Q16 and redemptions from U.K. Equity Funds hit their highest level since mid-October.

 

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

TAGS: Mutual Funds
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