Quants Corner

In the week ending 06/02/2019, bond funds saw a total inflow of 11.1 billion US$ vs equity funds which saw an inflow of 4.3 billion US$.

As expectations that US interest rates will be unchanged through 1H19 has increased, interest on Emerging markets on the rise again. The 4 week cumulative flows to Global Emerging Market mandated funds tracked by EPFR are at the second highest since 2013 May - when FED started tapering. In the last week, EM equity funds in total saw a total inflow of 3.2 billion US$ - mainly from institutional investors. EM bond funds saw an inflow of 4.4 billion US$ – 2.8 billion US$ in EM Hard Currency bond funds and 1.6 billion US$ in EM Local/Blend Currency funds.

Developed market equity funds saw relatively weak inflows of 1.1 billion US$ compared to Emerging Markets. Concerns of a second US government shutdown and US-China trade negotiations continued put pressure on investor sentiment in the US. US Equity fund saw an outflow of 670 million US$ in total. Western Europe also saw an mild inflow of 200 million US$, where APAC funds saw inflows of 1.9 billion US$ led by Japan passive funds. Decreased expectation of rate hikes by the FED has also continued to support investor attention toward developed market bond funds. This asset class saw inflows of 6.7 billion US$. This was led by inflows into high yield funds.

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Quant Corner