Fund flows favour US and emerging market equity

US equitiesEmerging market funds continued to see inflows last week, but investors pulled back from high yield due to the expected rise in US interest rates.

‘Junk’ bond funds had their biggest redemptions since mid-December according to EPFR Global, which provides global fund flow data.

Overall, nearly $12 billion (€11.2 billion) flowed into all equity funds in the five days up until March 8, while bond funds raised $4.6 billion and money market funds took in a net $26.6 billion.

EPFR said the “fair-to-good” economic data and Donald Trump’s reflationary agenda meant there were high expectations that US rates will rise again this week.

This kept money flowing into US equity funds but also prompted investors to “pencil in” stronger demand for emerging markets and commodities.

Diversified global emerging markets equity funds accounted for the bulk of the new money and only Latin America equity recorded inflows among the major regional fund groups. At the emerging market country level, Brazil equity funds took in fresh money for the seventh consecutive week and flows into Chile equity funds climbed to an 18-week high.

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