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US equity sales survive channeling of fund flows to money markets

Money market funds reversed two months of outflows in July as investors continued to pull out of equity and bond funds, latest figures show.

Money market funds gained net inflows of €7.9 billion during the month.

The French funds industry gained €9.1 billion of net inflows and a firm based there, Natixis Investment Managers, saw net sales of €5.1 billion. Both figures were mainly driven by money market demand, according to Lipper data.

July was the third month of net outflows from long-term mutual funds (which excludes money markets products) after 16 consecutive months with net inflows. Overall net outflows amounted to €5 billion, of which equities were the highest, at €2.1 billion.

However, flows into US equity funds continued. The €3.5 billion of net sales meant US equity was the best- selling sector among long-term funds in July.

Last Wednesday (22nd) marked the longest bull market in US history, according to Carolyn Bell, investment manager in Kames Capital’s equities team, who added that “while the US may seem expensive relative to other markets, it is not expensive relative to its own trading history”.

In a note asking ‘Are we there yet?’ for the end of the bull market, Bell added: “Fundamentals continue to be very supportive. US companies (ex-financials) have record cash on their balance sheet, close to $1,400 billion in aggregate at the end of 2017 versus $600 billion approximately in 2008 … So much cash suggests more M&A, more reasons for the market to rise.  The latter stages of a bull market can sometimes be the most rewarding.”

Mixed-asset funds saw €1.1 billion of net inflows and were again the best-selling individual asset type for July, according to Lipper.

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