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Questions abound as investors search for value

The second week of November saw the price of West Texas Intermediate crude oil drop below $60 a barrel for the first time since early February and key technology plays absorb further punishment as private and multi-lateral institutions continue to trim their forecasts for global growth in 2019. The week ended with the unveiling of a plan for the UK’s exit from the European Union that triggered the resignation of four ministers and increased the odds that Britain’s current, Conservative-led government could be forced to call another general election.

With the political and growth outlook in key developed markets looking increasingly cloudy, mutual fund investors turned to value plays in those markets and went looking for value in emerging markets. All four of the major EPFR-tracked Emerging Markets Equity Fund groups recorded inflows during the week, the first time that has occurred since mid-April, while Large Cap US Value Funds posted their fourth largest inflow year-to-date and Global Equity Value Funds since early 3Q17.

Overall, EPFR-tracked Equity Funds absorbed a net $4.6 billion during the seven days ending Nov.14. Investors committed $11.8 billion to Money Market Funds and pulled $5.2 billion out of Bond Funds. Their aversion to multi-asset fund groups shows no sign of abating, with Balanced and Total Return Bond Funds seeing another $4.9 billion redeemed as collective outflows from the two groups since early May hit the $76 billion mark.

At the single country fund level Brazil Equity Funds took in over $200 million for the third week running, China Equity Funds absorbed fresh money for the 16th straight week and commitments to South Africa Equity Funds hit levels last seen in early 4Q15 while France Equity Funds posted outflows for the sixth time in the past seven weeks and Italy Equity Funds for the 16th time in the past 17 weeks.

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