Fund flows after the US hike

Russian equities, high yield bonds and emerging markets are some of the funds to have benefited from the US interest rate increase, data shows.

High yield bond funds and emerging markets were two beneficiaries of the rise in US interest rates last week, data shows.

Mutual fund investors globally put over $4 billion (€3.8 billion) into high yield bond funds and also channelled fresh money to emerging markets equity funds for just the second time in the past seven weeks, according the EPFR Global. Bank loan funds also picked up $1.49 billion.

EPFR Global said that eight years of “consistent, if not always market friendly, fiscal and regulatory policymaking in the US is set to end in early 2017” when Donald Trump takes over from Barak Obama as US president.

Linked to this is strong interest in Russia bond and equity funds, which recorded their biggest inflows since the first quarter (Q1) of 2015 and Q1 of 2011, respectively, during the second week of December.

However, emerging markets bond funds saw redemptions surge in the wake of the Federal Reserve 0.25% interest rate increase, as did fund groups with major exposure to the fortunes of US real estate, principally mortgage-backed bond and real estate sector funds.

Overall, equity funds took in a net $18.45 billion during the week, while $4.8 billion was redeemed from bond funds.

©2016 funds europe

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