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Caution reigns in early October

The first week of October saw US lawmakers sparring over the country’s debt ceiling, authorities in China scrambling to limit the wider damage property giant Evergrande’s debt crisis may cause, and central bankers from Canada to Poland wrestling with the tradeoff between economic growth and rising prices.

Faced with this unappealing cocktail, investors’ risk appetite slipped several notches during the first week of October. High Yield Bond Funds posted their first outflow since the second week of July, Emerging Markets Bond Funds experienced net redemptions for the third straight week and over $1.2 billion flowed out of Alternative Funds while Inflation Protected Bond Funds absorbed over $1 billion for the third time in the past four weeks.

Appetite for exposure to socially responsible (SRI) or environmental, social and governance (ESG) themes remains strong. SRI/ESG Equity Funds extended an inflow streak stretching back to mid-3Q20 and year-to-date flows into SRI/ESG Bond Funds climbed past the $79 billion mark. Dedicated Cryptocurrency Funds also remained popular, with flows the highest in over four years, during a week when US officials said they have no plans to ban digital currencies.

 

 

 

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  • EPFR - fund flow & allocations data

    Quants Corner - Trick? Treat? Or contrarian FX signal?

    By Vik Srimurthy 20 Oct 2021

    QC

    In late October the mind – at least in the US – turns to brews, potions and mixtures as Halloween looms and faux witches cauldrons dot suburban lawns. Read more...

    Topic Industry News

  • EPFR - fund flow & allocations data

    Dealing with inflated expectations

    By Cameron Brandt 15 Oct 2021

    Global Nav

    Expectations for economic growth, US job creation and the transitory nature of inflation all took a knock during the second week of October as supply chain issues and rising energy prices continue to bite. Headline inflation for the US in September exceeded 5% for the third month running while new job creation was less than half of the expected total while the IMF trimmed another 0.1% off its global growth forecast. Investors responded by beefing up their exposure to inflation protected securities, pulling money out of the riskier fixed income fund groups and positioning themselves for short-term gains driven by the latest corporate earnings season. Both High Yield and Emerging Markets Bond Funds saw over $1.5 billion redeemed during a week when commitments to Inflation Protected Bond Funds hit an 11-week high. Overall, the week ending Oct. 13 saw EPFR-tracked Bond Funds post a collective net inflow of just $77 million. Equity Funds took in $11.8 billion, with a third of that total going to funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates, and Balanced Funds absorbed $1.4 billion.

    Topic Industry News

  • EPFR - fund flow & allocations data

    Caution reigns in early October

    By Cameron Brandt 08 Oct 2021

    Global Nav

    The first week of October saw US lawmakers sparring over the country’s debt ceiling, authorities in China scrambling to limit the wider damage property giant Evergrande’s debt crisis may cause, and central bankers from Canada to Poland wrestling with the tradeoff between economic growth and rising prices. Faced with this unappealing cocktail, investors’ risk appetite slipped several notches during the first week of October. High Yield Bond Funds posted their first outflow since the second week of July, Emerging Markets Bond Funds experienced net redemptions for the third straight week and over $1.2 billion flowed out of Alternative Funds while Inflation Protected Bond Funds absorbed over $1 billion for the third time in the past four weeks. Appetite for exposure to socially responsible (SRI) or environmental, social and governance (ESG) themes remains strong. SRI/ESG Equity Funds extended an inflow streak stretching back to mid-3Q20 and year-to-date flows into SRI/ESG Bond Funds climbed past the $79 billion mark. Dedicated Cryptocurrency Funds also remained popular, with flows the highest in over four years, during a week when US officials said they have no plans to ban digital currencies.

    Topic Industry News

  • EPFR - fund flow & allocations data

    Betting on big markets in late September

    By Cameron Brandt 01 Oct 2021

    GNN

    The third quarter of 2021 ended with investors continuing to whistle in the dark, committing fresh money to EPFR-tracked Equity and Bond Funds despite multiple risks to global growth. These include political brinkmanship over the US debt ceiling, the energy squeeze hitting China and parts of Europe, the winding down of programs implemented to buffer the initial shock of Covid-19, the pandemic’s evolution and the sustained rise in both producer and consumer prices. The final week of September saw Equity Funds pull in another $9.1 billion, capping their fourth consecutive quarterly inflow, while Bond Funds attracted another $7.9 billion that lifted their year-to-date total north of the $670 billion mark. Both groups have now exceeded the totals for their full-year records, set in 2013 and 2019 respectively.

    Topic Industry News

  • EPFR - fund flow & allocations data

    Quants Corner - The utility of water has never been clearer

    By Vik Srimurthy 17 Sep 2021

    QC

    EPFR’s data can be filtered in dozens of ways, including sifting through lists of individual funds to create bespoke groups. A recent example is the selection of utility sector funds with water mandates into a custom group. As it happens, these funds are in focus and in demand. With water getting scarcer in many parts of the world, governments boosting budgets for “green” infrastructure and water’s key role in next generation industries – by some estimates the average semiconductor plant requires over 3 million gallons of clean water a day – investors see both need and opportunity. Read more...

    Topic Industry News

  • EPFR - fund flow & allocations data

    Bears remain in hibernation as fall approaches

    By Cameron Brandt 17 Sep 2021

    Global Navigator

    Flows into EPFR-tracked Equity Funds jumped to a 26-week high in mid-September as investors continue to shrug off all manner of threats to the best-case scenarios for the US, European, Chinese and global economies. The investment case for the US appears particularly resilient. Despite headline inflation coming in north of 5% again during August, the constraints of the current debt ceiling, the administrations push for over $2 trillion in tax hikes, average new Covid-19 cases climbing to a level last seen in late January and an emerging consensus that the Federal Reserve will start (cautiously) tapering its bond purchases later this year, investors committed over $50 billion to US Equity and Bond Funds during the week ending Sept. 15. Those investors also showed less appetite for staying close to cash. US Money Market Funds saw $45.6 billion billion redeemed, their biggest weekly outflow since late 4Q20. Meanwhile, some US MM Fund providers are tapping into the broad appetite for exposure to socially responsible (SRI) or environmental, social and governance (ESG) principles. After a lull stretching from the third quarter of last year into April, flows to US SRI/ESG Money Market Funds have gained momentum each of the subsequent months, hitting a 13-month high in August.

    Topic Industry News

  • EPFR - fund flow & allocations data

    No let-up in fund flows despite latest headwinds

    By Cameron Brandt 10 Sep 2021

    GNN

    On September 6, enhanced unemployment benefits ended for millions in the US and the seven-day moving average for new Covid-19 cases worldwide stood at 616,000. On Sept. 7, Australia’s central bank confirmed the tapering of its bond buying program and troubled Chinese property developer Evergrande was hit with its second ratings downgrade in as many days. On Sept. 8, former US Fed Chair Janet Yellen warned that the latest debt ceiling impasse could trigger a default in as soon as October. On Sept. 9, as the European Central Bank met to discuss its response to inflationary pressures, EPFR’s latest data showed that $25 billion flowed into the Equity and Bond Funds it tracks during the first week of September. As they have for much of this year, investors allocated to the global rebound, Covid-clipped wings notwithstanding, the consensus on combating climate change, consumers in the world’s two largest economy and the profitability of major corporations. They have largely discounted tighter monetary policy, a return to widespread lockdowns and geopolitical shocks. Going into the second week of September, year-to-date flows to EPFR-tracked Alternative, Balanced, Bond and Equity Funds stood at 35%, 53%, 91% and 197% of their full year records. Among the country, thematic, sector and asset class fund groups on track to set new inflow records are Inflation Protected, SRI/ESG Equity and Bond, Infrastructure and Consumer Goods Sector, China Bond and US Equity Funds.

    Topic Industry News

  • EPFR - fund flow & allocations data

    Gravity remains on holiday in late August

    By Cameron Brandt 03 Sep 2021

    Global Nav

    Investors responded to signals that tapering of bond purchases by the US Federal Reserve could well start later this year and the partisan sparring over the debt ceiling by steering over $19 billion into EPFR-tracked US Equity and Bond Funds during the final week of August. Growing concern that China’s efforts to cool its property sector will deliver a blow to both Chinese and global economic growth, meanwhile, did not stop China Equity Funds absorbing $3.3 billion. Going into September, mutual fund investors continue to put their faith in US corporate earnings growth, central bank accommodation and a much greener future. While taking out some protection against higher inflation – Inflation Protected Bond Funds have taken in nearly $70 billion over the past 41 weeks – their response to the boost in Covid-19 cases driven by the Delta variant, political tensions in the Middle East and Asia, concerns about the trajectory of global growth and the impending end of Angela Merkel’s tenure in Germany has been muted. The latest week, ending Sept. 1, saw EPFR-tracked Equity Funds post collective inflows of $19 billion as the year-to-date total for Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates hit 108% of the full-year record set in 2020. Alternative Funds pulled in $1.3 billion, Balanced Funds $1.9 billion and Bond Funds $12.7 billion while $22.9 billion flowed out of Money Market Funds.

    Topic Industry News

  • EPFR - fund flow & allocations data

    Flows following key indexes higher

    By Cameron Brandt 27 Aug 2021

    Global Nav

    The week ending August 25 saw EPFR-tracked Equity Funds post their 35th straight inflow, taking their year-to-date total up to 186% of the full-year inflow record set in 2013. Faced with a crowded slate of variables ranging from the resurgence of Covid-19 infections through the crisis in Afghanistan to the possibility that the US Federal Reserve will start scaling back its bond buying program later this year, investors focused on the positives – strong corporate earnings, high levels of fiscal stimulus – and the buoyant effect these positives are having on benchmark indexes. While Exchange Traded Funds (ETFs) with equity mandates have attracted substantially more money than mutual funds so far this year, the split for all fund groups YTD is almost exactly 50-50. Total assets managed by all EPFR-tracked ETFs, having breached the $9 trillion mark in early June, currently stand at $9.5 trillion.

    Topic Industry News

  • EPFR - fund flow & allocations data

    Quants Corner - When Beijing squeezes, where does the money go?

    By Steven Xinlei Shen 24 Aug 2021

    Quants Corner

    The cancellation of Ant Financials’ scheduled IPO last November signaled the start of a sustained push by Chinese regulators to clip the wings of major technology plays. That push expanded to other businesses seen as out of line with official goals and policies. In their latest move, those regulators are proposing new rules requiring any Chinese company seeking to list on a foreign stock exchanges to carry out a cybersecurity review, Not surprisingly, given these official actions, foreign investors are running shy of Chinese equity. Flows for China Equity Funds were negative eight of the past 11 weeks going into mid-August and fund allocations to foreign listed China share classes – ADR, N Share and S chip – continues to fall. Read more...

    Topic Industry News

  • EPFR - fund flow & allocations data

    Climbing the wall of worry in mid-August

    By Cameron Brandt 20 Aug 2021

    Global Nav

    Despite weaker consumer data, discussion of tapering among policymakers at the US Federal Reserve, fresh outbreaks of the Covid-19 Delta variant and the Taliban’s stunning victory in Afghanistan, the money kept flowing to EPFR-tracked funds during the third week of August. Equity Funds recorded their biggest collective inflow since the second week of June, year-to-date flows to all Bond Funds pushed over the $550 billion mark and Balanced Funds saw their current inflow streak hit eight weeks and $21 billion. For much of the week ending August 18 a stellar second quarter corporate earnings season and the prospect of further hefty boosts to the already formidable amount of fiscal stimulus deployed by the US provided investors climbing the current “wall of worry” with handholds. Modest amounts moved out of both Japan and Europe Money Market Funds – in the case of the latter for the first time in nearly two months -- as investors put money to work. Although retail cash has been leaving US Money Market Funds consistently since mid-February, the overall pace of outflows offers lukewarm support – at best – to the pent-up consumer demand narrative. While both the Great Financial Crisis (GFC) and the Covid pandemic triggered a “dash for cash” that saw money pour into liquidity funds, the pattern of flows once this flight to cash peaked has differed. Starting in March 2009, it took only five months for redemptions to erase the influx of cash that US Money Market Funds had seen in 4Q08 and 1Q09. By mid-2010, over $400 billion had flowed out of this fund group in just 16 months. That story is not, so far, repeating itself as the Covid-19 pandemic plays out. Since June 2020 around $135 billion of the more than $1 trillion that flowed in during March, April and May last year has been redeemed. Indeed, net flows to US Money Market Funds YTD are positive.

    Topic Industry News

  • EPFR - fund flow & allocations data

    Amidst the new normal, earnings shine

    By Cameron Brandt 13 Aug 2021

    Global Navigator

    Early August saw Covid-19 cases rising in many corners of the world, US producer prices climbing at their highest rate since the metric was introduced in 2010, French protestors taking to the streets to fight vaccine mandates, US lawmakers arguing about debt ceilings and another $3.5 trillion spending package, the UN making apocryphal predictions about climate change and the clock continue to tick down on the Angela Merkel era in Germany. Faced with the daunting task of piecing together the shape of the ‘new normal’ from these and other trends and data points, investors focused on something they do understand – corporate earnings. With companies on both sides of the Atlantic pumping out eye-catching reports for the second quarter, EPFR-tracked Global Equity Funds extended an inflow streak stretching back to the final week of 2Q20, US Equity Funds absorbed fresh money for the 25th time in the 32 weeks year-to-date and flows into Europe Equity Funds hit an eight-week high. Despite high flying equity indexes, European investors are still gravitating to cash. Europe Money Market Funds, which have posted inflows for seven straight weeks, are the leading group in flow terms quarter-to-date. During the second quarter they recorded the biggest outflow and major EPFR-tracked fund groups.

    Topic Industry News

  • EPFR - fund flow & allocations data

    Investors treading cautiously – if at all – in early August

    By Cameron Brandt 06 Aug 2021

    Global Nav

    What to make of a market where the response to fears of slowing global growth is a string of record highs in equity markets on both sides of the Atlantic? How best to position yourself when inflation in the US is, by some measures, at a 30-year high but the stock of global debt with negative interest rates recently hit a seven-month high? Where is the sweet spot when ‘green’ funds extend lengthy inflow streaks and the price of thermal coal hits levels last seen over a decade ago? Faced with the need to reconcile these and other contradictory market signals, many investors opted to take a step back during the week ending August 4. Over half the $44 billion absorbed by all EPFR-tracked fund groups went to Money Market Funds. The headline number for Equity Funds, which have recorded inflows every week so far this year, was the fourth smallest year-to-date and Dividend Equity Funds saw their longest run of inflows since 1Q15 come to an end.

    Topic Industry News

  • EPFR - fund flow & allocations data

    ESG sounds good, but what does success look like?

    By Cameron Brandt 06 Aug 2021

    ESG

    Going into the final days of July, the Equity and Bond Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates tracked by EPFR chalked up their 51st and 70th consecutive inflows respectively. ESG investing clearly has long-term momentum and is becoming increasingly mainstream...

    Topic ESG

  • EPFR - fund flow & allocations data

    Quants Corner - Cruising to Alpha

    By Vik Srimurthy 04 Aug 2021

    Quants Corner

    In early June hundreds of Venetians gathered to protest the return of giant cruise ships to their famous city on Italy’s Adriatic coast. Waving flags and signs bearing the words “No Big Ships,” they reiterated their opposition to the passage of vessels often weighing over 100,000 tons through canals originally engineered for sailing ships and galleys. Read more...

    Topic Industry News

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