With the U.S., Japan, China and the Eurozone all posting encouraging second quarter macroeconomic numbers, and speakers at the U.S. Federal Reserve’s Jackson Hole summit letting very little slip when it came to future policy, investors took another look at some sectors during the fourth week of August. In a reverse of the previous week, when only three of the 11 major Sector Fund groups tracked by EPFR recorded inflows, eight of them attracted fresh money heading into September.
These inflows ranged from $6 million for Telecom Sector Funds to $555 million for Technology Sector Funds–their biggest weekly inflow since mid-May–and included only the third inflow recorded by Consumer Goods Sector Funds during the past 10 weeks.
Helped by attractive valuations, rising industrial demand and a renewed interest in dividend paying stocks, Utilities Sector Funds posted back-to-back inflows for the first time since mid-June. Month-to-date Utilities Sector Funds have been the second best performing group after Commodities Sector Funds.
Elsewhere, flows into Energy Sector Funds climbed to a nine-week high as Hurricane Harvey disrupted U.S. refining operations and a chunk of the country’s shale oil and gas production. Daily data shows investors jumping into funds with an oil focus when the extent of the damage from Harvey became apparent.
Of the fund groups experiencing outflows, Real Estate Sector Funds suffered the biggest redemptions as investors shifted their focus from the Jackson Hole meeting to the U.S. Federal Reserve’s September meeting when plans to trim the Fed’s balance sheet may be unveiled. Mortgage backed securities make up a significant part of that balance sheet, and investors fear a drop in Fed support for this asset class will translate into higher mortgage rates.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.