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Flows for Europe Equity and Bond Funds diverge sharply going into May

European stocks ended April with their fourth consecutive monthly gain as markets digested the inconclusive outcome of Spain’s general election, some better than expected first quarter earnings reports and data showing growth in the Eurozone rebounded during the first three months of the year. EPFR-tracked Europe Equity Funds, meanwhile, ended April by posting their 12th consecutive outflow and 61st in the past 63 weeks while Europe Bond Funds chalked up their biggest inflow since 1Q15 and second biggest since EPFR started tracking them.

This pattern, with mutual fund investors cashing in on rising equity markets and rotating to Bond Funds, is not confined to funds with European mandates. China, Global and US Equity Funds have posted outflows 9, 10 and 11 of the past 16 weeks respectively while China, Global and US Bond Funds have recorded inflows 9, 13 and 16 of those weeks.

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Overall, the week ending May 1 saw EPFR-tracked Bond Funds take in $8.8 billion and Money Market Funds $22 billion. Investors pulled a net $225 million out of Alternative Funds, $321 million out of Equity Funds – although Dividend Equity Funds posted consecutive weekly inflows for the first time since early 3Q17 -- and $2.65 billion out of Balanced Funds.

At the single country and asset class fund levels, Municipal Bond Funds followed up last week’s record-setting inflow by taking in fresh money for the 17th consecutive week while Bank Loan and Convertible Bond Funds extended their current redemption streaks to 24 and 32 weeks respectively. Flows into South Africa Equity Funds climbed to a 14-week high and both Saudi Arabia and Denmark Equity Funds set new inflow records.

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