Investors target developed markets funds

Investors globally had placed $2.1 billion (€2 bilion) into global equity funds by Wednesday last week, meaning developed market equity funds have posted positive net flows ten times in 11 weeks.

Overall, equity funds took in €1.67 billion when outflows from country-specific and other categories were considered. Flows into bond funds were positive, meanwhile, at $4.4 billion, though only half the previous week’s level.

EPFR Global, which publishes flow data, said the investment in global equities funds showed a trend for investors opting for diversified exposure in developed markets.

But not all developed markets benefited. Europe funds recorded their biggest weekly outflow since early December.

EPFR Global said investors looking to Europe were “weighing the region’s modest recovery and highly accommodative monetary policies” against a host of political risks ranging from elections in key markets to the potential shocks resulting from Brexit.

Norway, however, saw record-breaking inflows and is notable for not being a member of the EU. UK funds also increased their assets.

US equity funds saw their biggest redemptions since early November due to uncertainty over whether President Donald Trump will get his economic agenda through Congress. Other uncertainties include rate hikes and dollar strength weighing on US earnings. However, US bond fund flows increased, which is seen as a sign that investors question how aggressive the Federal Reserve will be with its rate hikes.

The third week of January saw emerging markets equity funds post consecutive weekly inflows for the first time since late October.

Global emerging market funds were one of the main beneficiaries, as were emerging markets in Europe, Middle East and Africa, where Russia has seen interest from investors recently.

EPFR measures weekly flows for five days up to each Wednesday.

©2017 funds europe

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