Fund flows search for new normal in mid-April
After several weeks of massive swings and multiple outflow records, the latest flow data for EPFR-tracked funds was notable for its lack of obvious red flags. Indeed, one of the few flow records set during the second week of April was a new inflow mark for High Yield Bond Funds, something usually associated with robust risk appetite. Equity, Bond, Money Market, Balanced and Alternative Funds all took in solid amounts of fresh money and flows into Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates rebounded to levels last seen in late February.
The key driver behind these inflows is the hope that recent numbers for the COVID-19 pandemic indicate the infection rate is at – or close to – peaking in several major markets including the US. Behind the benign looking headline numbers, however, were data points that suggest the market turmoil triggered by the pandemic is far from over. Perhaps the most striking is the level of recent flows into Leveraged Bear Funds and ETFs which magnify bets that markets for a variety of asset classes will fall.
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