This weekly publication provides an overview of the latest flows in and out of
funds on an international basis.
“Risk-on”. All of the higher risk fund categories, i.e. Corp. HY bonds, EM debt,
EM equities and finally also DM equities, indicate inflow momentum in
absence of momentum for IG Corp. debt and Government debt (see Figure 2,
page 2). With last minute negotiations in the US fiscal cliff debate postponing a
final decision, Total equity funds witnessed 2-year record inflows last week
backed by strong flows into DM equities. It remains to be seen, whether this is
sustainable (market consensus expects the debt ceiling to be lifted, once again,
and the US fiscal cliff to take c1.5% of US GDP according to our economists).
Japanese PM Abe’s announcements of further fiscal stimulus (JPY10tr) and a
new inflation target for the BoJ (2% p.a.) to reflate the Japanese economy
presumably attract further flow for domestic equity funds over the next weeks.
Over the past week (Wednesday close to Wednesday close), Total equity funds
witnessed 2-year record weekly inflows at 0.4% of their total assets. From the
DM space, US equity funds (+0.4%) and International equity funds (+0.3%)
received significant inflows as concerns over the US fiscal cliff debate abated.
While Western Europe equity funds recorded marginal inflows at 0.2% of their
total assets, other region-specific equity funds such as Japan equity funds
(+0.7%) and Pacific equity funds (+0.9%) managed to attract sizable inflows,
thereby taking overall flows into DM equity funds to 0.3% of their total assets.
With respect to the EM region, we have GEM equity funds registering high
inflows at 1.3% of their assets taking their YTD inflows to almost 2% within the
first two weeks (an ongoing trend of preferred diversified investments in the
EM equity region over region-specific approaches). Asia ex-Japan equity funds
recorded yet another week of significant inflows at 0.6% of their assets
(indicating accelerating momentum) followed by EMEA (+0.3%) and Lat-Am
equity funds (+0.2%) taking overall flows into EM equity funds to 0.9% of their
total assets over the past week.
Total bond funds managed to attract decent inflows (+0.3%) aside from record
inflows into equity funds. No redemptions were seen in any major bond fund
category. Investors’ continuing preference for higher yielding debt categories
led to sizable inflows into EM bond funds (+1.0%) and Corp HY funds (+0.5%).
Safe-haven bond categories such as US bond funds only saw marginal inflows.