The technology sector bucked the trend, posting the largest inflows since March. Financials, on the other hand, posted the largest outflows, as yield curve flattens and investors take profits.
MSCI’s index changes, as well as Chinese regulators clamping down on capital flight and unregulated financial products, have investors looking anew at the country’s domestic equity funds.
Redemptions from Brazil Equity Funds hit a 36-week high despite more optimistic projections for economic growth, the central bank’s easing bias and rising commodity prices.
Fears that the current crop of earnings may be as good as it gets and that higher bond yields will sap demand for equities, all weighed on investor sentiment.
Will a reduction in central bank balance sheets, combined with higher interest rates, be a headwind to emerging markets and high-yield bond funds? Historically, there is correlation.