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Start to 2019 echoes that of the previous year

The first full week of 2018 saw EPFR-tracked Equity Funds record their biggest inflow in 30 weeks and Bond Funds in 31 weeks. During the same week this year these fund groups recorded their biggest inflow in 11 and 39 weeks respectively. But the headline number for both was well down from a year ago, reflecting the tougher market conditions that sapped flows and performance for most fund groups during the fourth quarter.

Among the beneficiaries of hopes that the US tightening cycle is close to peaking and that Sino-US negotiations will lead to a resolution of the trade tensions that sapped investor sentiment for much of 2018 were Emerging Markets Bond Funds, which posted their biggest inflow in just under a year, and High Yield Bond Funds which snapped an eight-week redemption streak as they posted their biggest inflow since early October.

Overall, Equity Funds recorded a collective inflow of $6.16 billion during the seven days ending January 9 while Bond Funds absorbed $7.1 billion, Alternative Funds $246 million – an 11-week high – and Money Market Funds $40 billion. The numbers for these groups during the comparable week last year were $24.4 billion, $13.7 billion, $138 million and $21.4 billion.

The thaw in risk appetite was not enough to move the needle on the multi asset rankings that drive some of EPFR’s momentum models. Those rankings continue to reflect a marked preference for cash and short-duration US sovereign debt and deep concerns about riskier asset classes such as junk bonds and bank loans.

At the single country and asset class fund levels, Municipal Bond Funds posted their biggest inflow in nearly six months, Total Return Bond Funds saw their current redemption streak come to an end and flows into Mortgage Backed Bond Funds hit a 26-week high. Redemptions from China and Japan Bond Funds hit levels last seen in 1Q16 and 1Q15 respectively while Russia Equity Funds snapped an eight-week run of outflows and commitments to Philippines Equity Funds climbed to a 34-week high.

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