Going into March, U.S. Equity Funds took in fresh money for the first time since the last week of January as investor sentiment continued to recover from the battering it took in early February. These flows helped to boost the collective inflow recorded by all EPFR-tracked Developed Markets Equity Funds during the week ending Feb. 28 over the $13 billion mark for the fifth time in the nine weeks year-to-date.
The latest flows into U.S. Equity Funds were heavily weighted in favor of Large Cap exchange traded funds as investors looked for exposure to firms with significant foreign earnings that will be translated into more dollars when repatriated because of the American currency’s recent weakness. The dollar’s weakness also means U.S. equity is cheaper for overseas investors and foreign currency-denominated flows for U.S. Equity Funds were positive for the sixth time this year.
Europe Equity Funds again enjoyed solid inflows that went largely to funds with regional mandates as investors looked to tap into the region’s growth story while limiting direct exposure to the region’s political currents. With Italian voters going to the polls over the weekend, funds dedicated to that market and to markets that have had brushes with populism over the past 18 months struggled. Italy, France, Netherlands and Germany Equity Funds all experienced net redemptions, as did Austria Equity Funds which had posted their biggest outflow since 1Q16 the previous week.
Despite the country’s struggles to negotiate a workable exit from the European Union, flows to U.K. Equity Funds continued their recent rebound and Spanish Equity Funds took in fresh money for the ninth week, running with domestically based funds, attracting the bulk of the latest inflows. Retail investors have committed over $800 million to Spain Equity Funds since the beginning of November.
Japan Equity Funds extended their current inflow streak to 13 straight weeks. The weekly total was, however, the smallest since this run began in mid-4Q17 and foreign currency-denominated flows to this fund group were negative for only the second time since the beginning of September. At least some of the recent caution stems from the weakness of the U.S. dollar, which creates problems for Japanese exporters.
The largest of the diversified Developed Markets Equity Fund groups, Global Equity Funds, saw another $4 billion flow in which took the YTD total past the $50 billion mark. Funds with fully global mandates took in twice as much money as their ex-US counterparts.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.