European equity funds saw their largest quarterly outflow on record in the second quarter of the year as the Spanish elections and the UK’s EU referendum loomed.
Japan equity funds also saw their biggest redemptions since early 2008 and five weeks of inflows for emerging market equities reversed.
“Mutual fund investors spent much of 2Q ‘16 braced for the trouble they saw coming in June when, in the worst case scenario, the US Federal Reserve would raise interest rates, Spain would elect a left-of-center anti-austerity government and the UK would vote to leave the European Union,” said EPFR Global, a fund data firm.
“As it turned out, only one of those three things occurred. But it added to the headwinds - low commodity prices, negative interest rates in Japan and Europe, persistent concerns about China's economy -- which made April, May and June tough months for mutual funds to navigate.”
Fund groups associated with increased risk aversion, such as US investment grade bond products, fared well. Dedicated gold funds, for example, added another $6 billion (€5.4 billion) to the $10 billion they absorbed during the first three months of the year.
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