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FUND FLOWS: Investors Continue to Pull Money from Italy, Netherlands’ Funds

Although Europe equity funds recorded modest gains, fears that fresh turmoil in the Eurozone is one election or debt negotiation away stopped investors from chasing recent market gains.

During a week when key U.S. equity indexes posted fresh record highs, and populist Marine Le Pen topped French presidential election polls, EPFR Global-tracked Developed Markets Equity Funds recorded their largest inflows year-to-date. Global and U.S. Equity Funds accounted for the bulk of the headline number as YTD inflows for all Developed Markets Equity Funds pushed over the $40 billion mark. At the same point last year, they had experienced net redemptions totaling nearly $30 billion.

Although Europe Equity Funds recorded modest inflows, fears that fresh turmoil in the Eurozone is one election or debt negotiation away stopped investors from chasing recent market gains that lifted one key index to a 13-month high. Dutch voters go the polls next month and French voters in April, while Greece’s creditors are at odds over the best way to proceed with the current bailout program. At the country level, those investors continued to pull money out of Italy and Netherlands Equity Funds while redemptions from France Equity Funds climbed to an eight-week high. But, Spain Equity Funds attracted fresh money for the seventh straight week as they extended their longest inflow streak since an eight-week run ended in 2Q15.

Although investors are showing a marked preference for non-Eurozone markets, managers of Global Equity Funds—which have taken in over $22 billion so far this year—are still allocating on average over 17 percent of any inflows to the Eurozone. As a result, EPFR Global-tracked Equity Funds have been net buyers of German, Spanish, French, Dutch and Greek equity YTD.


The hesitancy investors are showing towards Europe was conspicuous in its absence when it came to North America, with U.S. Equity Funds absorbing over $8 billion despite another week of retail redemptions and Canada Equity Funds recording their biggest inflow in 13 weeks. Large Cap Funds posted the biggest inflows in cash terms and Small Cap Funds in flows as a percent of AUM terms. The only actively managed sub-group to see inflows were Small Cap Value Funds.

Japan Equity Funds benefited from both domestic and foreign support during the week ending Feb. 15, with daily data showing yen-denominated flows tailing off as the week progressed while foreign currency denominated flows accelerated. Despite Toshiba’s troubles and questions about private business investment, corporate Japan has been upgrading its earnings forecasts for the fiscal year ending in March and YTD flows into Japan Equity Funds are now north of $12 billion.

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


TAGS: Mutual Funds
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