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FUND FLOWS: U.S. Equity Funds Bleed Money Despite Favorable Circumstances

A strong corporate earnings season and subdued inflation weren’t enough to attract investors.

Going into August, U.S. equity markets, buoyed by a solid corporate earnings season and the U.S. Federal Reserve’s acknowledgement that inflation remains subdued, continued to post fresh record highs. The Dow Jones Industrial Average touched the 22,000-point mark while the year-to-date gain for the S&P 500 Index hit 10 percent. But the seven days ending August 2 saw investors commit over $3 billion to EPFR-tracked U.S. Bond Funds and over $17 billion to U.S. Money Market Funds while pulling money out of U.S. Equity Funds for the seventh straight week. 

This reluctance to be the last one standing when the current bull market finally hits the wall is particularly pronounced among retail investors. Since the beginning of 2012 retail investors have pulled some $840 billion out of U.S. Equity Funds, whose collective performance gains over the same period are just shy of 100 percent.


Investors still see opportunity in emerging markets and Europe. They extended the longest Emerging Markets Equity Funds inflow streak in over four years, steered fresh money into Emerging Markets Bond Funds for the 27th consecutive week, boosted flows into Europe Bond Funds to a five-week high and committed fresh money to Europe Equity Funds for the 18th time in the past 20 weeks.

Overall, Equity Funds posted collective inflows of $2.2 billion during the week ending August 2. Meanwhile, Bond Funds took in $7.3 billion and Money Market Funds, which absorbed a year-to-date high $31 billion the previous week, received $21 billion.

At the single-country and asset-class levels, Inflation Protected Bond Funds saw their four-week inflow streak snapped while commitments to Mortgage Backed Bond Funds climbed to an eight-week high. Russia Equity Funds recorded only their third inflow since the beginning of April, Turkey Bond Funds attracted fresh money for the 12th consecutive week and Korea Equity Funds set a new inflow record.

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

TAGS: Mutual Funds
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