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US Bond Funds see lengthy inflow streak come to an end

A run of inflows that started in late March came to an end for EPFR-tracked US Bond Funds going into the final week of September as investors digested the US Federal Reserve’s tepid outlook for the American economy and took a harder look at the swelling pile of corporate debt. High Yield Bond Funds, which invest sub-investment grade corporate bonds, saw over $5 billion redeemed.

Elsewhere during the week ending September 23, China’s footprint in the emerging market universe continued its rapid expansion with China Bond Funds posting their third weekly inflow record since mid-August and China Equity Funds recording the biggest inflows among EM Country and Regional Equity Fund groups. Sentiment towards Europe, meanwhile, is heading in other direction: for the second week running Europe Equity and Bond Funds both posted net outflows.

Overall, Bond Funds experienced a collective net inflow of $1 billion the week ending Sept. 23. Investors pulled $343 million out of Balanced Funds, $6.8 billion from Money Market Funds and $22.7 billion from Equity Funds. In the case of the latter, the headline number was influenced by the “triple witching’ that occurred on Sept. 18 when the contracts for stock index futures, stock options and stock index options expired on the same day, triggering significant shifts within US Equity Funds.

Quarter-to-date, US Bond Funds remain the biggest magnets for investor cash, a share of which is being pulled out of US Money Market Funds which topped the flow table for the second quarter but anchor the bottom of the table for the current quarter. Amidst the fixed income groups in the top 10, Equity Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates continue to stand out in what has been a banner year for them – year-to-date flows into SRI/ESG Equity Funds already exceed 2019’s record-setting total.

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