Cameron Brandt

EPFR - fund flow & allocations data

Funds with SRI/ESG mandates end second quarter on a high note

The final week of June was marked by uncertainty about the trajectory of America’s economic recovery and the future of its relations with China as new daily COVID-19 cases in the US topped 50,000 on the last day of the reporting period and China unveiled its new national security law for Hong Kong. Equity and Bond Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates, however, enjoyed a very good week with both groups setting new inflow records.

EPFR - fund flow & allocations data

Inflation Protected Bond Funds post new inflow record going into final week of 2Q20

Although the US headline inflation rate dipped to just 0.1% in May investors appear to be unconvinced this is the new normal for prices. During the week ending June 24 the Inflation Protected Bond Funds tracked by EPFR set a new weekly inflow record, breaking the $2 billion mark for the first time, as governments and central banks open the stimulus spigots ever wider to offset the economic impacts of the COVID-19 pandemic. Gold Funds also pulled in over $1 billion for the 11th time in the past 14 weeks. The flows into Inflation Protected Bond Funds contributed to another solid week for EPFR-tracked Bond Funds, which collectively extended their current inflow streak to 11 straight weeks. During than run, they have recouped some 40% of the $445 billion that investors pulled out of these funds in March.

EPFR - fund flow & allocations data

EPFR Emerging Markets - Navigating an unexpected stress test webinar

EPFR - fund flow & allocations data

Emerging Markets Equity Funds outflow streak hits 18 weeks and $54 billion

EPFR-tracked Emerging Markets Equity Funds moved closer in mid-June to establishing a new record run of outflows as investors pulled money out of them for the 18th consecutive week, four shy of their longest redemption streak which ended in late 1Q14 as the so-called ‘taper tantrum’ subsided. Outflows during the current streak equal some 4.5% of assets under management versus 6.2% of AUM during the record run. Angst about the state of Sino-US relations has been a key driver of the current redemptions and last year’s 21-week outflow streak. During the latest week China’s relations with India also took a sharp turn for the worse. China Equity Funds extended their longest outflow streak since 3Q17 and redemptions from India Equity Funds climbed to a nine-week high.

EPFR - fund flow & allocations data

Optimism about US job market and European stimulus boosts Equity Fund flows in early June

Flows into EPFR-tracked Equity Funds hit a two-month high during the week ending June 10 while Money Market Funds posted consecutive outflows for the first time since mid-February as investors responded to positive news on both sides on the Atlantic and moved further off the sidelines.

EPFR - fund flow & allocations data

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EPFR Fund Flow and Allocation Data and Insights

June kicks off with record setting inflows for Bond Funds

The week ending June 3 saw EPFR-tracked Money Market Funds record their biggest outflow since the second week of January. But, rather than chase rallying equity markets, investors have shifted their focus to fixed income groups. They steered over $30 billion into all Bond Funds – a new weekly record – with High Yield Bonds posting their second largest inflow since EPFR started tracking them and US Bond Funds their biggest in over 17 years.

EPFR Fund Flows

US Bond Funds end May by recording biggest inflow since 1Q15

Investors, who yanked $445 billion out of EPFR-tracked Bond Funds during March, ended May by committing the largest amount of fresh money to this fund group in over three months. US Bond Funds fared particularly well, posting their biggest inflow since the fifth week of 2015 when an escalating civil war in the Ukraine and Greece’s harder line with Eurozone creditors triggered a flight to safer fixed income groups.

EPFR Fund Flows

Curve for Money Market Fund flows flattening

Money Market Funds posted their first outflow since late February during the week ending May 20, capping – at least for now -- a flight to cash that has seen $1.2 trillion committed to these funds over the past 12 weeks. In that time, EPFR sister company iMoneyNet calculates that the average 30-day yield among taxable US Money Market Funds has fallen from 1.28% to 0.18%. Bond Funds, meanwhile, took in fresh money for the sixth straight week as High Yield Bond Funds extended a run of inflows stretching back to late March.

EPFR Fund Flows

Redemptions from China Equity Funds surge as trade tensions resurface

The prospect of a second major spike in Sino-US trade tensions cast a shadow over markets and some fund groups in mid-May. EPFR-tracked China Equity Funds posted their biggest weekly outflow since early 3Q15 as US President Donald Trump threatened China with new trade sanctions if it does not boost its imports from the US and allow independent investigation of the origins of the COVID-19 pandemic. Redemptions from all Emerging Markets Equity Funds, meanwhile, exceeded $3 billion for the fourth week running. Faced with a new source of uncertainty, already cautious investors steered another $35 billion into Money Market Funds while flows to US Bond Funds climbed to a 13-week high and Japan Equity Funds recorded their third largest inflow year-to-date. US Bond, Money Market and Japan Equity Funds all feature on the list of fund groups that have seen the largest inflows quarter to date, along with Leveraged Bear, High Yield Bond and SRI/ESG Equity Funds and a handful of major Sector Fund groups.

EPFR Fund Flows

SRI/ESG Bond Funds start May with record inflows

Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates have ridden out the volatility triggered by the COVID-19 pandemic, posting only one weekly outflow year-to-date and outperforming their non-SRI/ESG peers. Fixed income investors appear to have taken notice. EPFR-tracked SRI/ESG Bond Funds chalked up a new inflow record during the first week of May as they extended their current streak to six weeks and $5.4 billion.

EPFR Fund Flows

Flows into Money Market Fund YTD exceed $1 trillion

With key meetings, decisions and data points at, or after, the end of the latest reporting period, flows for most EPFR-tracked fund groups during the final week of April were subdued. Money Market Funds saw by far the biggest inflows in cash terms, taking in a net $91.5 billion that pushed their total year-to-date over the $1.1 trillion mark. Moving to cash aside, investors did show some positive conviction when it came to Turkish and Australian debt, junk bonds, several sectors, Mexican equity and funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates. Funds dedicated to European, Korean, South African and Brazilian equity, meanwhile, experienced above average redemptions. Overall, the week ending April 29 saw EPFR-tracked Bond Funds attract a net $10.5 billion and Alternative Funds $212 million. Equity Funds post a collective outflow of $6.7 billion – with Emerging Markets Equity Funds accounting for half of that headline number -- while $1.7 billion flowed out of Balanced Funds. Commitments to Dividend Equity Funds hit a seven-week high.

EPFR Fund Flows

Emerging Markets Equity Fund flows slide further as oil prices plunge

The third week of April saw oil prices briefly drop – by some measures – into negative territory, driven there by the massive demand shock caused by the COVID-19 pandemic and by the standoff between Saudi Arabia and Russia over output that delayed adjustments to global supply. Investors responded by pulling money out of North American and Emerging Markets Equity Funds, pumping record-setting sums into Energy Sector Funds and boosting flows into Money Market Funds for the first time since the third week of March. Overall, EPFR-tracked Equity Funds posted a collective net outflow of $7.2 billion during the seven days ending April 22, snapping a three-week inflow streak, and $393 million flowed out of Balanced Funds. Investors committed $1.1 billion to Alternative Funds, $10.7 billion to Bond Funds and $126.3 billion to Money Market Funds. In the case of Alternative Funds, the bulk of the headline number went to Leveraged Bear ETFs. Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates continue to plow their own furrow, recording inflows for the 15th time in the 16 weeks year-to-date. So far this year SRI/ESG Equity Funds have modestly outperformed all Equity Funds.

EPFR Fund Flows

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EPFR Fund Flows

Fund flows search for new normal in mid-April

After several weeks of massive swings and multiple outflow records, the latest flow data for EPFR-tracked funds was notable for its lack of obvious red flags. Indeed, one of the few flow records set during the second week of April was a new inflow mark for High Yield Bond Funds, something usually associated with robust risk appetite. Equity, Bond, Money Market, Balanced and Alternative Funds all took in solid amounts of fresh money and flows into Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates rebounded to levels last seen in late February. The key driver behind these inflows is the hope that recent numbers for the COVID-19 pandemic indicate the infection rate is at – or close to – peaking in several major markets including the US. Behind the benign looking headline numbers, however, were data points that suggest the market turmoil triggered by the pandemic is far from over. Perhaps the most striking is the level of recent flows into Leveraged Bear Funds and ETFs which magnify bets that markets for a variety of asset classes will fall.