Equity fund redemptions slow on Europe hope

Global equity funds continued to experience outflows during the second week of October, but the pace of redemption moderated to a four week low of $1.37bn, according to the latest data from EPFR Global.

Data found four of the nine major fund groups attracted modest amounts of fresh money. Brad Durham, managing director, said: “Overall there seems to be some equilibrium this week between optimists and pessimists.”

Developed market equity funds were able to eke out inflows for the first time in five weeks, with new capital of $2.4bn into ETFs despite the YTD redemptions amounted to $49.2bn. Europe equity funds posted consecutive weeks of inflows for the first time since July as investors are hoping European leaders to recapitalise banks so they can ride out further shocks.

However, the firm’s tracked emerging markets equity funds posted an 11th consecutive week of outflows that investors redeemed $40.5bn year-to-date (YTD) from this category. They also pulled money out of Asia ex-Japan equity funds for the eighth straight week.

In contrast, flows into China equity funds hit a 15-week high as institutional investors committed fresh money for the first time in 10 weeks, seeing fears for the region were overdone. Flows into Asia ex-Japan ETFs were positive during the week, contributing all emerging markets ETFs to post inflows for the first time since late July.

Meanwhile, investors continued put money into US bond funds, committing over $2.5bn during the week. However, Europe bond funds extended their decline to five weeks for $2.4bn and investors pulled another $1.4bn out of global fixed income category.

Emerging market bond funds experienced outflows for the fourth straight week but the pace of redemptions has moderated as both local and hard currency denominated securities attracted fresh money.

In addition, commodities sector funds posted outflows for the third week in a row, but still maintaining the YTD inflows of $9.6bn.


This article was first published on Professional Adviser Hong Kong.

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