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FUND FLOWS: After French Election, Investors Focus on Central Banks

For the time being, European politics is taking a back seat to monetary policy.

The burst of enthusiasm that followed the first round of France’s two-stage presidential contest faded rapidly during the week ending May 3, as investors shifted their focus, for the moment, from European politics to central bank policies. The week kicked off with the European Central Bank’s April meeting and ended with the U.S. Federal Reserve’s May meeting, with meetings of Russia and Australia’s central banks in between.

Flows into Europe Bond Funds jumped to a 16-week high and Europe Equity Funds extended their longest inflow streak since the fourth quarter of 2015. The streak came after the ECB kept its current policies unchanged and ECB President Mario Draghi said that tapering the current quantitative program has not been discussed. Meanwhile, more than $9 billion flowed out of U.S. Equity Funds ahead of the Fed’s meeting and a subsequent statement that soft first quarter numbers won’t change its stance on raising interest rates.

Overall, EPFR Global-tracked Equity Funds saw a net $3.5 billion redeemed during the seven days ending May 3, while Bond Funds absorbed another $9.7 billion and Money Market Funds over $12 billion. Dividend Equity Funds extended their longest run of inflows year-to-date with Global Dividend Funds accounting for the bulk of the headline number.

At the single country and asset class levels, Germany Equity Funds recorded their biggest inflow in more than a year, redemptions from France Equity Funds jumped to a 29-week high. India Equity Funds took in fresh money for the ninth week running. Investors pulled money out of Inflation Protected Bond Funds for the third straight week (the first time that has happened in over 14 months) while extending Convertible Bond Funds’ longest inflow streak since midway through the fourth quarter of 2015.

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

TAGS: Mutual Funds
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