Cameron Brandt

EPFR - fund flow & allocations data

Bears remain in hibernation as fall approaches

By Cameron Brandt 17 Sep 2021

Flows into EPFR-tracked Equity Funds jumped to a 26-week high in mid-September as investors continue to shrug off all manner of threats to the best-case scenarios for the US, European, Chinese and global economies. The investment case for the US appears particularly resilient. Despite headline inflation coming in north of 5% again during August, the constraints of the current debt ceiling, the administrations push for over $2 trillion in tax hikes, average new Covid-19 cases climbing to a level last seen in late January and an emerging consensus that the Federal Reserve will start (cautiously) tapering its bond purchases later this year, investors committed over $50 billion to US Equity and Bond Funds during the week ending Sept. 15. Those investors also showed less appetite for staying close to cash. US Money Market Funds saw $45.6 billion billion redeemed, their biggest weekly outflow since late 4Q20. Meanwhile, some US MM Fund providers are tapping into the broad appetite for exposure to socially responsible (SRI) or environmental, social and governance (ESG) principles. After a lull stretching from the third quarter of last year into April, flows to US SRI/ESG Money Market Funds have gained momentum each of the subsequent months, hitting a 13-month high in August.

EPFR - fund flow & allocations data

No let-up in fund flows despite latest headwinds

By Cameron Brandt 10 Sep 2021

On September 6, enhanced unemployment benefits ended for millions in the US and the seven-day moving average for new Covid-19 cases worldwide stood at 616,000. On Sept. 7, Australia’s central bank confirmed the tapering of its bond buying program and troubled Chinese property developer Evergrande was hit with its second ratings downgrade in as many days. On Sept. 8, former US Fed Chair Janet Yellen warned that the latest debt ceiling impasse could trigger a default in as soon as October. On Sept. 9, as the European Central Bank met to discuss its response to inflationary pressures, EPFR’s latest data showed that $25 billion flowed into the Equity and Bond Funds it tracks during the first week of September. As they have for much of this year, investors allocated to the global rebound, Covid-clipped wings notwithstanding, the consensus on combating climate change, consumers in the world’s two largest economy and the profitability of major corporations. They have largely discounted tighter monetary policy, a return to widespread lockdowns and geopolitical shocks. Going into the second week of September, year-to-date flows to EPFR-tracked Alternative, Balanced, Bond and Equity Funds stood at 35%, 53%, 91% and 197% of their full year records. Among the country, thematic, sector and asset class fund groups on track to set new inflow records are Inflation Protected, SRI/ESG Equity and Bond, Infrastructure and Consumer Goods Sector, China Bond and US Equity Funds.

EPFR - fund flow & allocations data

Gravity remains on holiday in late August

By Cameron Brandt 03 Sep 2021

Investors responded to signals that tapering of bond purchases by the US Federal Reserve could well start later this year and the partisan sparring over the debt ceiling by steering over $19 billion into EPFR-tracked US Equity and Bond Funds during the final week of August. Growing concern that China’s efforts to cool its property sector will deliver a blow to both Chinese and global economic growth, meanwhile, did not stop China Equity Funds absorbing $3.3 billion. Going into September, mutual fund investors continue to put their faith in US corporate earnings growth, central bank accommodation and a much greener future. While taking out some protection against higher inflation – Inflation Protected Bond Funds have taken in nearly $70 billion over the past 41 weeks – their response to the boost in Covid-19 cases driven by the Delta variant, political tensions in the Middle East and Asia, concerns about the trajectory of global growth and the impending end of Angela Merkel’s tenure in Germany has been muted. The latest week, ending Sept. 1, saw EPFR-tracked Equity Funds post collective inflows of $19 billion as the year-to-date total for Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates hit 108% of the full-year record set in 2020. Alternative Funds pulled in $1.3 billion, Balanced Funds $1.9 billion and Bond Funds $12.7 billion while $22.9 billion flowed out of Money Market Funds.

EPFR - fund flow & allocations data

Flows following key indexes higher

By Cameron Brandt 27 Aug 2021

The week ending August 25 saw EPFR-tracked Equity Funds post their 35th straight inflow, taking their year-to-date total up to 186% of the full-year inflow record set in 2013. Faced with a crowded slate of variables ranging from the resurgence of Covid-19 infections through the crisis in Afghanistan to the possibility that the US Federal Reserve will start scaling back its bond buying program later this year, investors focused on the positives – strong corporate earnings, high levels of fiscal stimulus – and the buoyant effect these positives are having on benchmark indexes. While Exchange Traded Funds (ETFs) with equity mandates have attracted substantially more money than mutual funds so far this year, the split for all fund groups YTD is almost exactly 50-50. Total assets managed by all EPFR-tracked ETFs, having breached the $9 trillion mark in early June, currently stand at $9.5 trillion.

EPFR - fund flow & allocations data

Climbing the wall of worry in mid-August

By Cameron Brandt 20 Aug 2021

Despite weaker consumer data, discussion of tapering among policymakers at the US Federal Reserve, fresh outbreaks of the Covid-19 Delta variant and the Taliban’s stunning victory in Afghanistan, the money kept flowing to EPFR-tracked funds during the third week of August. Equity Funds recorded their biggest collective inflow since the second week of June, year-to-date flows to all Bond Funds pushed over the $550 billion mark and Balanced Funds saw their current inflow streak hit eight weeks and $21 billion. For much of the week ending August 18 a stellar second quarter corporate earnings season and the prospect of further hefty boosts to the already formidable amount of fiscal stimulus deployed by the US provided investors climbing the current “wall of worry” with handholds. Modest amounts moved out of both Japan and Europe Money Market Funds – in the case of the latter for the first time in nearly two months -- as investors put money to work. Although retail cash has been leaving US Money Market Funds consistently since mid-February, the overall pace of outflows offers lukewarm support – at best – to the pent-up consumer demand narrative. While both the Great Financial Crisis (GFC) and the Covid pandemic triggered a “dash for cash” that saw money pour into liquidity funds, the pattern of flows once this flight to cash peaked has differed. Starting in March 2009, it took only five months for redemptions to erase the influx of cash that US Money Market Funds had seen in 4Q08 and 1Q09. By mid-2010, over $400 billion had flowed out of this fund group in just 16 months. That story is not, so far, repeating itself as the Covid-19 pandemic plays out. Since June 2020 around $135 billion of the more than $1 trillion that flowed in during March, April and May last year has been redeemed. Indeed, net flows to US Money Market Funds YTD are positive.

EPFR - fund flow & allocations data

Amidst the new normal, earnings shine

By Cameron Brandt 13 Aug 2021

Early August saw Covid-19 cases rising in many corners of the world, US producer prices climbing at their highest rate since the metric was introduced in 2010, French protestors taking to the streets to fight vaccine mandates, US lawmakers arguing about debt ceilings and another $3.5 trillion spending package, the UN making apocryphal predictions about climate change and the clock continue to tick down on the Angela Merkel era in Germany. Faced with the daunting task of piecing together the shape of the ‘new normal’ from these and other trends and data points, investors focused on something they do understand – corporate earnings. With companies on both sides of the Atlantic pumping out eye-catching reports for the second quarter, EPFR-tracked Global Equity Funds extended an inflow streak stretching back to the final week of 2Q20, US Equity Funds absorbed fresh money for the 25th time in the 32 weeks year-to-date and flows into Europe Equity Funds hit an eight-week high. Despite high flying equity indexes, European investors are still gravitating to cash. Europe Money Market Funds, which have posted inflows for seven straight weeks, are the leading group in flow terms quarter-to-date. During the second quarter they recorded the biggest outflow and major EPFR-tracked fund groups.

EPFR - fund flow & allocations data

Investors treading cautiously – if at all – in early August

By Cameron Brandt 06 Aug 2021

What to make of a market where the response to fears of slowing global growth is a string of record highs in equity markets on both sides of the Atlantic? How best to position yourself when inflation in the US is, by some measures, at a 30-year high but the stock of global debt with negative interest rates recently hit a seven-month high? Where is the sweet spot when ‘green’ funds extend lengthy inflow streaks and the price of thermal coal hits levels last seen over a decade ago? Faced with the need to reconcile these and other contradictory market signals, many investors opted to take a step back during the week ending August 4. Over half the $44 billion absorbed by all EPFR-tracked fund groups went to Money Market Funds. The headline number for Equity Funds, which have recorded inflows every week so far this year, was the fourth smallest year-to-date and Dividend Equity Funds saw their longest run of inflows since 1Q15 come to an end.

EPFR - fund flow & allocations data

ESG sounds good, but what does success look like?

By Cameron Brandt 06 Aug 2021

Going into the final days of July, the Equity and Bond Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates tracked by EPFR chalked up their 51st and 70th consecutive inflows respectively. ESG investing clearly has long-term momentum and is becoming increasingly mainstream...

EPFR - fund flow & allocations data

Money chases US market highs and China market rout in late July

By Cameron Brandt 30 Jul 2021

Going into the final days of July, major US equity indexes were bouncing from record high to record high, buoyed by a strong second quarter earnings season. Meanwhile, China’s benchmark Shanghai Composite Index was recovering from a 6% drop triggered by aggressive Chinese regulatory action against several domestic sectors. Investors saw positives in both trends, committing over $10 billion to US Equity Funds and lifting flows into China Equity Funds to a 15-week high. Elsewhere, Inflation Protected Bond Funds set a new weekly inflow mark, and for the 20th time in the past 22 weeks both of the two major multi-asset fund groups, Balanced and Total Return Funds, posted inflows. With evidence of climate stress abounding, Equity and Bond Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates chalked up the 51st and 70th consecutive inflows respectively. Among the Alternative Fund groups, Bear Funds posted their first weekly inflow quarter-to-date. These funds, which seek to profit from declining markets, saw flows pick up in late 2Q21 as investors started questioning some of the projections for US and global economic growth.

EPFR - fund flow & allocations data

Another week of mixed messages in mid-July

By Cameron Brandt 23 Jul 2021

The third week of July saw numerous countries wrestling with severe drought while others, among them China and Germany, counted the costs of massive floods. In the US, where looking-to-hire signs are proliferating in business districts across the country, first-time jobless claims climbed. New cases of Covid-19 worldwide are again north of 500,000 a day but the ratio of deaths has fallen from one in every 42 cases at the end of January to one in every 65 cases. With the needles for many key datapoints swinging rapidly in often contradictory directions, flows to EPFR-tracked funds remained choppy and subdued. Equity Funds recorded their second smallest inflow year-to-date, redemptions from Alternative Funds jumped to a 16-week high, Bank Loan Funds’ longest inflow streak since 1H17 came to an end and four of the five fund groups tied to cyclical sectors posted an outflow. In addition to the twin specters of rising inflation and rebounding Covid-19 caseloads, and their potential impact on the global reflation story, some investors are starting to question the degree to which pent-up consumer demand will drive growth in the second half of the year. In the US, consumers are spending and starting to take on more debt. Retail redemptions year-to-date from US Money Market Funds stand at over $135 billion. But the enhanced unemployment benefits spigot is being closed and is slated to be largely shut off by September. Retail investors are still steering money into Europe Money Market Funds and savings rates throughout the developed world remain above pre-pandemic levels.

EPFR - fund flow & allocations data

Our Financial Intelligence leaders discuss ESG Investing Landscape: What’s Driving Momentum

By Cameron Brandt 21 Jul 2021

EPFR - fund flow & allocations data

Investors navigate multiple currents

By Cameron Brandt 16 Jul 2021

In a year of multiple – and often competing – economic narratives and themes, the second week of July offered something for everyone. For the reflationary bulls, key equity indexes on both sides of the Atlantic hit fresh record highs as new US childcare tax credits started flowing, the Chinese government cut reserve requirements for domestic banks and the 2Q21 US corporate earnings season got off to a strong start. For inflation hawks, core US inflation in June hit its highest level since 1991. For those betting on a greener future, the European Union unveiled a sweeping plan, Fit for 55, that aims to eliminate petrol-driven vehicles and expand the use of carbon taxes. For those who believe that the Covid-19 pandemic remains the biggest story, infection rates driven by the Delta variant continued to climb. Against this backdrop, flows to EPFR-tracked funds followed the stimulus trail while steering clear of groups where monetary tightening or the ongoing pandemic could have a bigger impact. China Equity Funds posted their first inflow since the second week of June and biggest since the second week of May, Infrastructure Sector Funds extended their longest inflow streak since 2014 and Europe Bond Funds enjoyed record-setting inflows during a week when the European Central Bank announced a new inflation targeting policy. Overall, the week ending July 14 saw all Equity Funds post a collective net inflow of $18.7 billion versus $362 million for Alternative Funds, $2.5 billion for Balanced Funds, $5.6 billion for Bond Funds and an outflow of $30 billion for Money Market Funds.

EPFR - fund flow & allocations data

Delta hitting expectations of alpha in early 3Q21

By Cameron Brandt 09 Jul 2021

Flows into EPFR-tracked Bond Funds jumped to a 22-week high in early July as investors, already digesting mixed economic data from the US and China, wrestled with the implications for global growth of the worldwide surge in Covid-19 infections driven by the Delta variant of the coronavirus. The latest spike in Covid cases has already crimped economic activity in China’s Guangzhou province, raised the specter of a second lost tourist season for Europe and prompted Japan to reimpose a state of emergency in Tokyo. It is also giving US consumers and businesses another reason to be cautious about spending the capital and savings they stockpiled during the pandemic. The US personal savings rate remains well above its pre-pandemic level and much of the cash that flowed into EPFR-tracked US Money Market Funds last year is still there.

EPFR - fund flow & allocations data

Quants Corner - Growth vs Value in 2Q21: Chasing under-performance?

By Cameron Brandt 08 Jul 2021

Tech is back! After five months of some ups and more downs, the month of June has been kind to the technology sector. From the mid-May low, the NASDAQ has outperformed the S&P 500 by almost 7%. If we look in smart beta terms, Growth has outperformed Value by around 11.5% over the same period. Read more...

EPFR - fund flow & allocations data

A question of growth going into 2H21

By Cameron Brandt 02 Jul 2021

For much of the year-to-date the question of just how much inflation recovering economies will generate, and just how transitory that inflation will be, has occupied investors. As the second quarter wound down, however, another question has intruded: what if it is the economic growth that is transitory? With China’s economy feeling the pinch from some modest policy tweaks and the US Federal Reserve signaling that interest rates could start to rise at least a year earlier than previously expected, Commodities Sector Funds ended June by posting consecutive weekly outflows for the first time in over eight months while Industrial Sector Funds extended their longest redemption streak since 1Q20 and investors pulled money out of China Equity Funds for the fourth time in the past six weeks. The specter of rising prices and visions of a greener future continued to influence flows going into the second quarter. Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates extended an inflow streak that started in mid-August of last year, Bank Loan Funds posted their 26th consecutive inflow and Inflation Protected Bond Funds absorbed fresh money for the 32nd week running. The week ending June 30 also saw EPFR-tracked Dividend Equity Funds record their eighth straight inflow, their longest such run in over six years, as investors positioned themselves for increased US and European bank dividends after those banks successfully navigated the latest round of stress tests. The latest run of positive flows to US Dividend Funds comes at a time when the average dividend yield for companies in the S&P 500 index has dropped to 1.3%.