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Equity Funds produce the returns in 2019, Bond and Money Market Funds get the cash

December 2019 ended with the benchmark US equity indexes up between 22% and 35%, the Euro Stoxx 50 sitting on a 26% gain for the year and the MSCI All World Index just off a record high. But anyone looking solely at mutual fund flows would be forgiven for wondering if 2019 had seen a repeat of the economic conditions that defined 2008 and 2009 as investors shunned Equity Funds for Bond Funds, which posted their second full-year inflow record in the past three years, and Money Market Funds which eclipsed the old inflow mark set in 2009.

Collectively, the Equity Funds tracked by EPFR gained over 23% during the year versus 7% for all Bond Funds and 0.7% for all Money Market Funds. But, with growing numbers of people entering retirement in North America, Europe and Japan, retail investors saw stock market gains as a chance to cash out positions and rotate their gains to safer vehicles. Demographic trends cut both ways in 2019, with the growing impact of millennial investors – and their preferences – driving record-setting sums into funds with socially responsible (SRI) or environmental, social and governance (ESG) mandate.

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