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Progress on trade reflected in flows to EM Funds

There was plenty for investors to ponder during the third week of December as the US House of Representatives approved articles of impeachment for President Donald Trump, UK voters gave the ruling Conservative Party a clear majority and the outlines of an initial Sino-US trade deal were announced.

The announcement of the first step in a phased deal between China and US boosted flows to EPFR-tracked Emerging Markets Equity and Bond Funds. In the case of EM Equity Funds, overall inflows were the biggest since mid-1Q18 as flows into dedicated China Equity Funds hit their highest level in over seven months. Emerging Markets Bond Funds, meanwhile, recorded their biggest inflow since early February.

With the Boris Johnson-led Conservatives now in a position to honor their electoral pledge “to get Brexit done”, flows into UK Equity Funds during the week ending Dec. 18 exceeded the $1 billion mark for only the fourth time since the beginning of 2Q18. Investors also pulled over $1 billion out of Europe ex-UK Regional Funds while committing fresh money to regional funds whose mandates encompass the UK.

Overall, investors steered $14.8 billion into all EPFR-tracked Equity Funds as those with socially responsible (SRI) or environmental, social and governance (ESG) mandates posted their fourth record high since the beginning of September. Alternative Funds collectively took in $622 million and Bond Funds $6.2 billion. A net $1.19 billion flowed out of Balanced Funds and $48.1 billion from Money Market Funds.

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