With the global growth story losing some of its shine, tariff-related rhetoric increasing in volume and a populist government taking office in Italy, investors opted for liquidity in early June. Flows into all EPFR-tracked Money Market Funds hit levels last seen in late October of 2013, with U.S. Money Market Funds alone absorbing over $45 billion.
Investors did respond - cautiously - to some of the bright spots in the global growth picture. U.S. Equity Funds extended their longest inflow streak since the fourth quarter of 2017 and China's 6 percent plus GDP growth also caught their attention: flows into China Bond Funds climbed to their highest level in over 17 months and China Equity Funds posted inflows for the 11th straight week.
While good news for some American asset classes, estimates that U.S. economic growth could hit an above-trend rate of around 4 percent during the second quarter has reinforced predictions of three more US rate hikes this year, with the next one later this month, and rekindled fears of higher inflation. Flows into U.S. Inflation Protected Bond Funds hit their highest level since the fourth quarter of 2016 and Bank Loan Funds took in fresh money for the 15th straight week, but Global Bond Funds recorded their biggest outflow in over two years and Emerging Markets Equity and Bond Funds both extended their longest redemption streaks since the fourth quarter of 2016.
Overall, investors removed $5.4 billion from all EPFR-tracked Bond Funds during the week ending June 6. Equity Funds absorbed a net $898 million despite the sixth straight outflow in excess of $1 billion from Dividend Equity Funds and over $55 billion flowed into Money Market Funds.
At the asset class and single country fund levels, redemptions from High Yield Bond Funds hit a 13-week high and Total Return Bond Funds extended their longest run of outflows since the first quarter of 2016. France Equity Funds saw money flow out for the seventh straight week, Austria Equity Funds set a new weekly outflow record and Japan Bond Funds recorded their 25th consecutive outflow.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.