China and Japan Equity Funds continue to find support while Europe Funds struggle

China and Japan Equity Funds continue to find support while Europe Funds struggle

With the US mid-term elections and the US Federal Reserve’s second-to-last meeting of 2018 on the horizon, investors found little reason during the first week of November to break out of the cautious, Asia-centric pattern they have been following since early October. Japan and China Equity Funds recorded inflows either side of the $2 billion mark and US Bond Funds with short term mandates enjoyed another strong week while Europe Bond Funds extended their longest outflow streak since 4Q11 and Europe Equity Funds recorded their ninth consecutive outflow.

Hopes – that were realized – of a return to divided government in the US, with both major parties able to check the worst excesses of the other and perhaps exercise a degree of restraint on President Donald Trump when it comes to trade barriers, prompted some emerging markets investors to move beyond China. The diversified Global Emerging Markets (GEM) Equity Funds recorded their biggest weekly inflow since the second week of April. Funds with global mandates also fared better, with Global Equity Funds snapping their longest outflow streak since 2Q13 and Global Bond Funds posting their biggest inflow since mid-July.

Overall, the week ending Nov. 7 saw EPFR-tracked Equity Funds take in a net $3.5 billion while Bond Funds absorbed $5.4 billion and Money Market Funds over $36 billion. With interest rates predicted to rise again late this year, US Dividend Equity Funds posted outflows for the 39th time this year while fears of slower growth and tighter monetary policy helped extend Europe Dividend Equity Funds current 23-week redemption streak.

At the asset class and single country fund levels, Municipal and Inflation Protected Bond Funds extended their longest outflow streaks since 4Q16 and 4Q14 respectively and redemptions from Total Return Bond Funds since the start of July topped the $21 billion mark. Brazil Equity Funds recorded their biggest inflow in 33 weeks, flows into Portugal Equity Funds climbed to an eight-week high, Vietnam Equity Funds posted their largest outflow in over three years and redemptions from Japan Bond Funds hit levels last seen in 1Q15.