Despite the complete lack of retail support and key central bank meetings on the horizon—as well as the possibility of another U.S. debt-ceiling fight—all four of the major EPFR Global-tracked Developed Markets Equity Fund groups posted inflows in excess of $1 billion during the week ending March 8.
French polling numbers that have swung against nationalist presidential candidate Marine Le Pen allowed investors to focus on the modest recovery in European growth, job creation and corporate profitability evident in recent months. Europe Equity Funds recorded inflows for the sixth time in the past seven weeks. At the country level, however, investors continue to favor funds dedicated to markets outside the Eurozone. U.K. Equity Funds posted their biggest weekly inflow in 56 weeks, with the inflows broadly distributed among different funds, while France Equity Funds saw money redeemed for the fourth straight week and 10th time in the past 12 weeks.
Large Cap Blend ETFs monopolized the latest flows into U.S. Equity Funds during a choppy week for equities with the debt ceiling deadline and the next Fed meeting both looming. Actively managed U.S. Equity Funds, which did modestly outperform their ETF counterparts for the week but still lag them YTD, again struggled to attract fresh money. Mid-Cap Blend and Value and Small Cap Value Funds were the only actively managed sub-groups to post inflows.
Japan Equity Funds continue to attract solid yen and foreign currency denominated flows, extending their longest inflow streak since 1Q16. Managers of Japan Equity Funds took their average allocations for information technology and industrial stocks to their highest level since 2Q15 during the first five weeks of 2017 while continuing to cut their exposure to the health care and consumer staples sectors.
The largest of the diversified Developed Markets Equity Fund groups, Global Equity Funds, took in another $1.8 billion, with Global ex-U.S. Funds attracting three times the money as those with fully global mandates.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.