With Italy’s general election signaling European populism is far from defeated, President Trump’s administration is trying to flesh out Trump’s plans for fresh tariffs on steel and aluminum imports, and with meetings of the European Central Bank and Bank of Japan impending, mutual fund investors had plenty of reasons to keep a low profile during the first week of March. And they did.
Redemptions from all EPFR-tracked Equity Funds amounted to less than $500 million, equal to 0.004 percent of assets under management, while outflows from all Bond Funds totaled an equally modest 0.002 percent of AUM.
Only Money Market Funds, often viewed as an equivalent for cash, recorded significant inflows during the week ending March 7. Analysis of cash holdings for EPFR-tracked Equity and Bond Funds, meanwhile, shows that a majority of funds are fully invested in their respective asset classes. These lean cash positions (see chart below) were highlighted by members of an EPFR panel that convened recently in London, who expressed the view that the industry as a whole may struggle to respond to—or take advantage of—future market shocks.
Behind the flat overall number for Equity Funds, money continued to flow into Global and Japan Equity Funds with the former absorbing over $4 billion for the eighth time in the 10 weeks year-to-date and the latter extended an inflow streak that is now the longest in over four years. China Equity Funds also recorded inflows for the sixth time in the past seven weeks.
At the asset class and single country fund levels, Mortgage Backed Bond Funds recorded their ninth consecutive inflow and Inflation Protected Bond Funds took in fresh money for the 19th time in the past 20 weeks while High Yield Bond Funds posted their eighth consecutive outflow. Flows into Brazil Bond Funds hit a 22-week high and Russia Bond Funds posted inflows for only the third time since the beginning of August.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.