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FUND FLOWS: Money Continues to Move Into Emerging-Markets Bonds and Equities, and High-Yield Bonds

Investors also continued to favor global funds in the week ending July 19.

Flows into fund groups tied to riskier asset classes rebounded in mid-July as investors interpreted U.S. Federal Reserve Chair Janet Yellen’s remarks to Congress in the most dovish possible light. EPFR Global–tracked Emerging Markets Bond, Emerging Markets Equity and High Yield Bond Fund inflows climbed to three-, four- and 15-week highs, respectively, and Technology Sector Funds posted consecutive weekly inflows for the first time since early June.

Investors also decided that fears of premature tightening by the European Central Bank have been overdone in recent weeks. Flows into Europe Equity Funds hit their highest level in more than two months while commitments to Europe Bond Funds climbed to a more modest three-week high.

Fund groups with diversified geographical mandates continued to attract the lion’s share of the new money. Global Equity Funds took in another $4.6 billion, Global Bond Funds extended their current inflow streak to 27 weeks and $37 billion, and flows into Global Emerging Markets (GEM) Equity Funds accounted for two-thirds of the headline number for all EM Equity Funds.

Overall, the week ending July 19 saw all EPFR Global–tracked Equity Funds absorb another $9.8 billion, and Bond Funds, $10.7 billion, while some $16 billion flowed out of Money Market Funds.

At the single-country and asset-class levels, Total Return Bond Funds posted their 25th consecutive inflow, Inflation Protected Bond Funds extended their longest run of inflows since late March, and U.S. Convertible Bond Funds experienced record-setting redemptions. Portugal Equity Funds recorded their biggest inflow in nearly two months, and India Equity Funds snapped a two-week outflow streak while Turkey Equity Funds recorded their second-biggest outflow year to date.

Cameron Brandt is director of research for EPFR Global, an Informa Financial Intelligence company.

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