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US Equity and High Yield Bond Funds in the money as Fed cuts rates for the second time in a row

The second consecutive 0.25% rate cut that followed the Federal Reserve’s mid-September policy meeting triggered a fresh volley of disapproving tweets from US President Donald Trump. But flows into US Equity Funds jumped to a 26-week high and all EPFR-tracked Equity Funds recorded their biggest collective inflow since late 1Q18 as investors began to feel fresh pangs of yield hunger. In addition, High Yield Bond Funds attracted over $3 billion for the second straight week, Alternative Funds pulled in another $1.7 billion, Emerging Markets Equity Funds saw a 21-week redemption streak come to an end and Emerging Markets Bond Funds posted their fourth straight inflow.
Overall, EPFR Equity Funds collective absorbed a net $19.2 billion for the week ending Sept. 18. Equity Funds with socially responsible (SRI) or environmental, social and governance mandates (ESG) mandates set a new weekly inflow record. Investors also steered $6.5 billion into Bond Funds and snapped Balanced Funds’ 66-week run of outflows.
Money Market Funds recorded modest outflows during a week when the US repo market, a key asset class for US Money Market Funds, showed signs of stress that led to the New York Fed intervening on three separate occasions.
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