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Europe Equity Funds enjoy a rare inflow as perceptions of Brexit shift

Although yet another Brexit ‘deadline looks set to pass without the UK leaving the European Union, hopes that the drawn-out process is nearing the end helped EPFR-tracked Europe Equity Funds post only their fourth weekly inflow since the beginning of 2Q18 during the third week of October. UK Equity Funds, meanwhile, posted their third largest inflow year-to-date.

The belief that the end of Brexit saga is finally in sight also helped to sustain the modest rise in risk appetite seen the previous week. Flows into High Yield and Emerging Markets Bond Funds climbed to five-week highs, Frontier Markets Equity Funds posted their third inflow since the beginning of March, Alternative Funds took in over $1 billion and flows to major Sector Fund groups tilted towards those with less defensive reputations. But overall, investors continued their year-long rotation from Equity Funds to Bond and Money Market Funds, pulling another $3.8 billion out of the former and committing a combined $22 billion to the latter fund groups.

Investors retained their appetite for funds with socially responsible (SRI) or environmental, social governance (ESG) mandates. SRI/ESG Equity Funds took in fresh money for the 42nd straight week and SRI/ESG Bond Funds for the 42nd time in the past 44 weeks. Dividend Equity Funds also continue to gain momentum, adding to their longest run of inflows since 3Q17 by posting their biggest inflow since mid-June.

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