The week spanning December and January, investors pumped over $1 billion into Global and Global Emerging Markets Equity Funds, steered $1.34 billion—a 59-week high—into Industrial Sector Funds and extended Inflation Protected Bond Funds longest inflow streak since the start of 2017, as they positioned themselves for the new year. Broadly based global growth and higher inflation driven by wage growth and energy prices have figured prominently in the crush of 2018 outlooks and predictions, as have Italy’s upcoming general election and the impact of the U.S. Tax Cuts and Jobs Act on the world’s largest economy.
With the tax reforms that passed late last year having a strong bearing on the way, 2018 plays out for the U.S. economy and political trends in Europe giving pause for thought, investors continued to take a cautious approach to both of those markets. Europe Equity and Bond Funds did record inflows during the week ending Jan. 3 but redemptions from U.S. Equity Funds exceeded $10 billion for only the third time in the past 18 months. U.S. and Europe Money Market Funds, meanwhile, absorbed over $16 billion and U.S. Bond Funds recorded their biggest inflow since the third week of November.
Overall, EPFR Global-tracked Bond Funds collectively took in $9.2 billion, a 13-week high, during the seven days ending Jan. 3 as they closed the book on a year that saw them post a record-setting inflow. Equity Funds, which chalked up their second biggest annual total in 2017 on the back of Global Equity Funds’ record-setting year, started 2018 with an outflow of $4.5 billion. Money Market Funds absorbed a net $39 billion.
At the asset class and single country fund levels, Inflation Protected Bond Funds took in fresh money for the 11th straight week while High Yield Bond Funds snapped their longest run of outflows since the first quarter of 2008. Flows into Chile Equity Funds climbed to a 12-week high, Netherlands Equity Funds posted their biggest inflow since late in the third quarter of 2015 and Thailand Equity Funds since the final week of 2015.