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Money Market Funds close books on record setting quarter

The third quarter ended as it began, with EPFR-tracked Equity Funds experiencing net redemptions and Bond Funds net inflows that took their year-to-date totals to -$230 billion and +$481 billion respectively, as investors continue to brace for a cyclical downturn that they have been anticipating for the better part of four years. In recent months their outlook has been shared by the world’s major central banks. Since the beginning of July the US Federal Reserve cut interest rates twice to sustain the current recovery and the European Central Bank, faced with a sharp slowdown in the German economy, restarted the quantitative easing program it wrapped up at the end of last year.

Not surprisingly, mutual fund investors are revisiting their assumptions about yield, global economic growth and inflation. High Yield and Inflation Protected Bond Funds, which both posted collective outflows during 2Q19, saw flows rebound during the third quarter and dedicated Gold Funds recorded their biggest quarterly inflow since 2Q16. Liquidity has also assumed even greater importance: the provisional number for Money Markets Funds during 3Q19 eclipses the previous inflow record set in 4Q08 at the height of the sub-prime debt crisis.

 

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