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Hope springs again for US-China trade deal

The week ending April 17 saw EPFR-tracked US Equity Funds post consecutive weekly inflows for the first time since early September and China Equity Funds for the first time since mid-February as hopes built that the two countries will reach an agreement on the trade issues that have divided them since US President Donald Trump took office in early 2017.

This cautious optimism about Sino-US trade relations was not enough to derail the ongoing rotations from Equity to Bond Funds and from Developed Markets Equity Funds to Emerging Markets Equity Funds. It also failed to stem the outflows from Europe Equity Funds, which have now experienced net redemptions for 10 straight weeks and 56 of the past 60.

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Equity Funds with socially responsible (SRI) and environmental, social and governance (ESG) mandates continue to get a pass on the redemption front. The latest week’s inflows topped $1.5 billion and were the largest since EPFR started tracking this sub-group in 2000.

Overall, EPFR-tracked Bond Funds absorbed another $7.9 billion during the seven days ending April 17 while $539 million flowed out of Alternative Funds, $1.1 billion out of Equity Funds, $1.3 billion out of Balanced Funds and $67 billion out of Money Market Funds. The redemptions from Money Market Funds reflected the deadline for US taxpayers to file their 2018 taxes: during the same week in 2018 outflows hit a two-month high.

At single country and asset class fund levels, France Bond Funds posted their biggest weekly inflow since 3Q17 while France Equity Funds recorded their 26th consecutive outflow, redemptions from Hong Kong Equity Funds hit levels last seen in late 2Q13 and Saudi Arabia Equity Funds absorbed fresh money for the 15th week running. Total Return Bond Funds took in over $1 billion for the seventh straight week while High Yield and Municipal Bond Funds extended their longest inflow streaks since 4Q17 and 2H16 respectively.

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