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FUND FLOWS: U.S Bond Funds Big Winners of 2017

With six weeks of the year remaining, U.S. Bond Funds have been by far the biggest money magnets in cash terms year-to-date.

Investors gave thanks for cheaper entry points ahead of the U.S. Thanksgiving holiday, with flows into Emerging Markets Equity and Bond Funds rebounding to five and six-week highs, respectively. Europe Bond Funds also had their best week in over three months. Overall, the week ending November 22 saw EPFR-tracked Equity Funds absorb a net $8.7 billion and Money Market Funds $22 billion while Bond Funds bounced back from their first outflow since the first quarter to record their biggest inflow in seven weeks.

Investors continued to keep their distance from riskier fixed income asset classes that could react badly to the U.S. interest rate hike that markets have penciled in for next month. High Yield Bond and Bank Loan Bond Funds both posted their fourth consecutive outflow, redemptions from Dividend Equity Funds hit levels last seen during the second week of August and Europe Equity Funds saw more money flow out as investors shied away from exposure to most of the continent's major markets.

With six weeks of 2017 remaining, U.S. Bond Funds have been by far the biggest money magnets in cash terms year-to-date, with net inflows currently north of $370 billion, while Argentina Equity Funds lead the way in flows in percentage of AUM terms.


Looking ahead, "We're heading into the period when funds going ex-dividend can throw a wrinkle in the weekly flow numbers," Ian Wilson, EPFR's Director of Data, said. "The dividends paid out to clients are recorded as an outflow, but most are usually reinvested which shows up as an inflow. If the dividends are paid close to the end of the reporting period you can get big outflows one week, then big inflows the next that have nothing to do with investor sentiment."


Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.

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