'Normal service' resumes as bond flows outpace equities

Bond indicesRetail investors pumped more money into equities last week, though bond funds saw the largest inflows for the first time since early December.

Bond funds took in $2.58 billion (€1.93 billion) during the week ending February 13, while equity funds, which saw $60 billion of outflows last year, added $1.81 billion, according to EPFR Global, a data firm.

The figures come after some market commentators have spoken of a “great rotation” back into equities and could puncture the argument. EPFR Global said “normal service” had resumed in equity markets.

Nevertheless, retail investors committed fresh money for the sixth straight week to equities, the longest such run since the first quarter of 2011.

EPFR Global says that against a backdrop that included fresh uncertainty about the Eurozone’s prospects and fears of a destabilising global currency war, investors hit Europe bond funds with their biggest redemptions in over a year and slowed their recent rush into China equity funds.

But they retained their enthusiasm for Japan, bank loans and diversified exposure to emerging markets debt and equity.

For the seventh consecutive week both emerging market bond funds and emerging market equity funds took in over $1 billion. Emerging markets equity funds took in fresh money for the 22nd straight week.

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