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Fund groups feel the squeeze as China tightens

Signs, ranging from an appreciating currency to rising junk bond yields, that Chinese authorities are making good on pledges to normalize economic policy and wring speculative excesses from the world’s second largest economy caught the attention of investors during the third week of June. China Equity and Bond Funds both experienced net redemptions, as did Commodities and Energy Sector Funds, while Emerging Markets Equity Funds extended their longest outflow streak since mid-3Q20 and Emerging Markets Bond Funds posted their second largest outflow year-to-date.

US Equity and Bond Funds both absorbed fresh money, but flows were subdued as markets worked through a “quadruple witching” –when stock index futures, stock index options, stock options and single stock futures all expire on the same day – and parsed the US Federal Reserve’s statements about inflation during and after its June meeting. Growing concern about the chances the Delta variant of the Covid-19 virus will fuel another wave in the current pandemic also weighed on a range of fund groups.

 

 

 

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