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FUND FLOWS: Weary of Single Country Exposure, Investors Turn To Global Funds

Economic, monetary and foreign policy hurdles led to outflows from the U.S., Canada, the U.K. funds over the past week. Global emerging markets posted 27th week of consecutive inflows.

Fund groups with diversified geographical mandates stood out during the second week of July as economic, monetary and foreign policy questions limited investor appetite for single country funds and those dedicated to riskier asset classes, such as junk bonds. The week ending July 12 saw Global Equity Funds take in over $3 billion for the seventh straight week, Global Bond Funds extend their longest inflow streak since a 33-week run ended in the fall of 2011 and Global Emerging Markets (GEM) Equity Funds post their 27th consecutive inflow. U.S., Japan, Germany, U.K., Canada, China, India and Russia Equity Funds all recorded outflows.

Among the issues currently complicating investment decisions are the ability of an under pressure U.S. President Donald Trump to pursue his economic agenda. His ability to respond effectively to North Korea's provocations, the possibility that the European Central Bank will start winding down its quantitative easing program, the U.S. Federal Reserve's appetite for further tightening are also making things hard.

A weakened British government will take to negotiating its exit from the European Union and China's efforts to manage credit growth are also factors in play. The start of the second quarter corporate earnings season and a new round of major central bank meetings starting July 20 will also provide new elements to the story.

Overall, all the Equity Funds tracked by EPFR Global took in a net $4.8 billion during the second week of July, as flows into Dividend Equity Funds jumped to a nine-week high and Bond Funds absorbed another $4.4 billion. Money Market Funds attracted nearly $6 billion, with the bulk of that money going to funds with U.S. mandates.

At the asset class and single country fund level, High Yield Bond posted their biggest outflow since the third week of March while Total Return Bond Funds recorded inflows for the 24th consecutive week. Spain Bond Funds experienced record-setting redemptions, outflows from China Equity Funds hit a 29-week high and UK Equity Funds saw money flow out for the 11th time in the past 12 weeks.

TAGS: Investment
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