FUND FLOWS: European Equity Funds Continue to Attract New Money

Inflows to diversified global equity funds absorbed redemptions from U.S. and Japanese equity funds for the week ended July 12.

EPFR Developed Markets Equity Funds kept their current run of modest inflows intact during the week ending July 12 as strong flows into Global Equity Funds and smaller commitments to Europe Equity Funds offset redemptions from U.S. and Japan Equity Funds. Year-to-date, net flows to Developed Markets Equity Funds are roughly twice as large as those absorbed by Emerging Markets Equity Funds in flows as a percentage of AUM terms and four times as large in cash terms.

Europe Equity Funds attracted fresh money for the 14th time in the past 15 weeks with diversified regional funds accounting for the bulk of the headline number. Better macroeconomic data, hopes that still weak inflation numbers will keep the European Central Bank in easing mode and France's reform story contributed to the rebound from last week's outflow.

At the country level, Italy Equity Funds snapped a four-week run of outflows following the rescue of two Venetian banks and signs that fiscal tightening will be delayed. Europe Equity Fund allocations for both Italy and France have rebounded since the beginning of the year while those for markets outside the Eurozone have dropped sharply: Switzerland's is currently at its lowest level since the start of 2011 and Sweden's since the fourth quarter of 2015.

EPFR Global

Japan Equity Funds saw their four-week inflow streak come to an end in the wake of North Korea's latest missile test. Fears that the ruling Liberal Democratic Party's recent loss of popularity is tied to 'reform fatigue' also contributed to the outflows. Foreign currency denominated flows continued their recent slide, with redemptions hitting levels last seen in late March, as the U.S. dollar hit a four-month high against the Japanese yen.

EPFR Global

Redemptions from U.S. Equity Funds came in at an extremely modest 0.2 percent of AUM, with more than $5 billion in outflows from actively managed funds offsetting over $4 billion in commitments to U.S. Equity ETFs. During a week when funds managed for growth outperformed their value counterparts across all
capitalizations, Large Cap Growth Funds recorded the biggest inflows.

TAGS: Investment
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