During 2017 the Bond Funds tracked by EPFR took in more than twice the amount committed to Equity Funds, despite being collectively outperformed by a six-to-one margin by the latter. Investors are now scrambling to make up lost ground. The week ending January 24 saw Equity Funds post a new weekly inflow record, breaching the $30 billion mark for only the second time since EPFR started tracking them in 4Q95. Those flows came on the heels of last week’s inflow, the sixth largest at the time, and takes the month-to-date total over $70 billion.
Also seeing record-setting inflows during the week were Global, UK and Argentina Equity Funds and Technology Sector Funds. The UK figure was, however, tied to a single fund group, as were the record inflows posted by Inflation Protected and UK Bond Funds.
The previous record for all Equity Funds, set in late 4Q14, rested heavily on the appetite of risk averse investors to the U.S. recovery story and was magnified by the reinvestment of dividends paid out the previous week. This week’s number was more broadly based, with US, Global, Japan, Europe and Emerging Markets Equity Funds all absorbing over $3 billion. Overall, EPFR-tracked Equity Funds absorbed a net $33.2 billion during the third week of January versus $3.9 billion for Bond Funds, $3.7 billion for Money Market Funds and $1.3 billion for Alternative Funds.
At the asset class and single country fund levels, flows into China and Hong Kong Equity Funds hit 133- and 144-week highs, respectively, Italy Equity Funds posted outflows for the 12th time in the past 13 weeks and redemptions from Australia Equity Funds hit levels last seen in mid-3Q16. Bank Loan Funds enjoyed their biggest inflow since early 2Q17 and flows to Total Return Bond Funds climbed to a 13-week high.
With one of the so-called FANG (Facebook, Amazon, Netflix and Google) plays reporting better than expected 4Q17 earnings and the other three due to report next week, investors piled into EPFR-tracked Technology Sector Funds during the third week of January. They also regained their appetite for exposure to gold, helping Commodities Sector Funds post their biggest inflow since late March of last year, and committed solid sums of fresh money to Financial and Utilities Sector Funds.
The record setting flows into Technology Sector Funds, meanwhile, were broadly based. Over two dozen funds attracted $10 million or more, and the mandates of the funds posting the biggest inflows during the week ranged from semiconductor to artificial intelligence plays.