Last week’s (Wed-Wed) review of funds’ in/outflows as % of funds’ AuM.
The global fund flow picture kept its recent shape to close out April, with investors continuing to rebuild positions in fund groups they fled last year and early this year (DM credit, EM debt) while pulling back from fund groups tied
to NIRP markets (Japan, Europe equity) and normalizing flows out of overallocated assets (DM sovereigns).
The latest redemptions from Japanese equity funds now pulled their year-todate flows into negative territory, while European peers – which posted record setting inflows last year – saw the strongest outflows since Oct’14, pulling the
3-month flow momentum for ETFs to the most negative since Aug’08 (see centre right chart). In a week where the ECB and the BoJ kept their policies unchanged, fund investors continued to lose faith in the impact of monetary stimulus, whilst uncertainties regarding the UK referendum persist (Europe), and competitive FX advantages and inflation expectations wane (Japan).
In terms of new money investments, last week’s flows showed a more cautious risk appetite as investors waited to see what signals emerged from the three DM central banks’ statements. HY bond funds attracting only a quarter of the inflows they averaged over the previous nine weeks, and new commitments to EM equity funds barely broke through the zero mark, slowing the pace of pain relief brought by the rise in oil prices
Across asset classes – bonds (+) vs. equities (-) &. MM (-):
Total equity funds (-0.1%, MFs: -0.2%, ETFs: +0.1%) declined for a third straight week as Japanese (-0.8) and European funds (-0.4%) continued to be a drag. Total bond funds (+0.1%) once again saw inflows with credit (+0.2%) still enjoying the oil rally and dollar weakness, and only partially offset by sovereign fund redemptions (-0.3%). Global money market funds (+0.0%) witnessed marginal inflows as investors showed some caution before the central bank notes.
DM equity funds (-) with Japan (--), W. Europe (-), with US (~):
DM equity funds (-0.1%, MFs: -0.2%, ETFs: +0.1%) saw redemptions for a third consecutive week driven by significant losses across Japan (-0.8%, MFs: -0.7%, ETFs: -0.8%) and Western Europe (-0.4%, MFs: -0.3%, ETFs: +0.9%). US equity funds gained marginal inflows (+0.0%, MFs: -0.2%, ETFs: +0.4%), but the outflow streak for US mutual funds extended into the 42nd week.
EM equity funds (-) with EMEA (+) vs. Asia ex-Japan (-) &. LatAm (-):
EM equity fund flows (+0.0%, MFs: +0.0%, ETFs: +0.1%) were positive for another week as MF flows turned positive for the first time in 12 months. Regionally, EMEA inflows (+0.2%, MFs: +0.2%, ETFs: +0.3%) outweighed losses across Asia ex-J (-0.1%, MFs: -0.1%, ETFs: -0.3%) and LatAm (-0.1%, MFs: -0.2%, ETFs: -0.3%). China equity funds (-0.4%) witnessed outflows for the second week in a row.
Bond funds (+) with credit (+) and EM debt (+) but sovereigns (-):
Total bond funds (+0.1%) experienced significant inflows, again driven by credit (+0.2%) and EM debt (+0.1%). Europe HY funds continued to witness inflows for the 10th consecutive week whereas their US counterparts (-0.1%) turned negative. Sovereign redemptions continued for the 10th consecutive week with outflows across US & Europe. Meanwhile EM debt funds continued their positive run for yet another week.