Fund flows reflect caution around central bank meeting

Investors ploughed billions of dollars into money market funds last week – more than six times as much as they invested in bond funds.

EPFR Global, which compiles flow data, said this reflected a “cautious, late summer mood” ahead of the US Federal Reserve’s annual central bank summit in Jackson Hole, Wyoming, last week.

Money market funds attracted $37 billion (€31 billion) during the five days up to August 23.

As well as outstripping bond funds by six times, the figure is also 12 times the amount raised by equity funds.

Cameron Brandt, EPFR Global head of research, said: “With the European Central Bank’s reputation for premature tightening and its current quantitative easing (QE) programme approaching the date it was last extended to, perhaps the most anticipated speech during the summit is [bank president] Mario Draghi’s.”

Brandt said investors were concerned that improving economic data from the Eurozone may prompt the central bank to start tapering its QE programme in the fourth quarter.

Funds into European equity funds have declined for four weeks in a row, recording their first outflow in the past week since early July.

Flows to emerging markets equity and bond funds, meanwhile, “bounced back” after inflow streaks of 21 and 28 weeks came to an end the previous week.

Overall, EPFR-tracked equity funds recorded a collective inflow of $3 million during the five-day period versus $5.4 billion for bond funds and the $37 billion for money market funds.

©2017 funds europe

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