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Trade and political risks keep lid on Equity Fund flows in late May

EPFR-tracked Equity Funds posted their 10th outflow in the past 11 weeks going into the final days of May as trade issues weighed on US and Emerging Markets Equity Funds and political ones on Europe Equity Funds. In the case of Europe Equity Funds, which have now experienced net redemptions for 16 straight weeks, the latest source of investor angst were elections for the European Union’s parliament that have already triggered a snap election in Greece, clouded the outlook for Italy’s relations with the Eurozone and emboldened those in the UK seeking a ‘no deal’ exit from the EU.

There were some exceptions to an otherwise dour week for most Equity Fund groups. Socially responsible (SRI) or environmental, social and governance (ESG) mandates continued to work their magic with SRI/ESG Equity Funds racked up their 21st consecutive inflow. At the country level, Saudi Arabia Equity Funds added to their stellar run ahead of the country’s shift from frontier to emerging markets status and hopes that re-elected Indian Prime Minister Narendra Modi will be encouraged to push forward with more structural reforms helped India Equity Funds record their biggest inflow in over 15 months. There was also a rare weekly inflow for Dividend Equity Funds driven largely by funds with US mandates.

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Bond Funds, meanwhile, took in fresh money for 21st straight week, their longest inflow streak since a 34-week run ended in mid-4Q17. Investors also committed a net $12.8 billion to EPFR-tracked Money Market Funds during the week ending May 29 and pulled $321 million out of Alternative Funds and $1.8 billion out of Balanced Funds.

At the asset class level, Municipal and Mortgage Backed Bond Funds extended their longest inflow streaks since 2016 while Bank Loan and Convertible Bond Funds recorded their 29th and 38th consecutive outflows respectively.

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