Many of the major market drivers were in neutral or first gear during late May. Another U.S. rate hike in June is considered a done deal, President Donald Trump’s policy initiatives are being heavily discounted, Europe’s populist tide is seemingly ebbing. The first quarter earnings season is largely done and dusted and OPEC agreed to extend its current production capping agreement.
Fund flows for the week ending May 24 reflected this absence of conviction, following the pattern of recent weeks, but well off the pace seen earlier in the quarter. Flows into Global and Emerging Bond Funds, for instance, were roughly a quarter of the previous week’s total while redemptions from U.S. Equity Funds dropped by two-thirds. There were some exceptions at the country level, with specific events affecting China and Brazil Equity Fund flows, and residual concerns about Europe remain centered on Italy.
Overall, investors steered another $7.75 billion into EPFR Global-tracked Bond Funds going into the final week of May and $1.6 billion into Equity Funds. A net $14.5 billion flowed out of Money Market Funds.
At the asset class and single-country fund level, redemptions from Germany Equity Funds hit a 56-week high while Italy Bond Funds posted outflows for the 14th time in the past 15 weeks. Municipal Bond Funds took in fresh money for the 10th consecutive week with commitments hitting a six-week high, and Total Return Bond Funds extended their lengthy inflow streak.