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Equity fund flows in mid-March tracking Dow’s ascent, ‘Abenomics’ and dividends

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US, Japan and dividend equity funds enjoyed strong inflows during the second week of March as benchmark equities indexes around the world tested multi-year highs and investors continued their recent pivot from Europe and emerging markets to Japan and the US.

While EPFR Global-tracked China equity funds recorded their biggest outflow in over five years their US counterparts pulled in over USD10bn and Japan equity funds more than USD1bn.

Overall, equity funds absorbed a net USD14.1bn during the week ending March 13 and bond funds USD3.03bn while money market funds saw USD7.1bn flow out.

Dividend equity funds, meanwhile, recorded their biggest weekly inflow since the current financial crisis began.



Fixed income investors steered record setting amounts of money into Canada bond funds and solid sums into high yield, floating rate and balanced funds.

But expectations that inflation will take off in developed markets crumbled, with inflation protected bond funds posting their biggest outflow since EPFR Global started tracking them weekly in 1Q07, and municipal bond funds saw their 11 week inflow streak come to an end.

At the country level there was some enthusiasm among emerging markets investors for some of the smaller Asian markets and Turkey. Europe equity fund flows, in a departure from recent trends, favoured dedicated country funds over regional ones with Italy equity funds again taking in fresh money despite the uncertainty about what kind of government – if any – will emerge from the current negotiations.

The headwinds for EPFR Global-tracked emerging markets equity funds kept building in mid-March as inflation joined a list that already includes the Eurozone’s extended slump, Japan’s offensive against the value of the yen and questions about China’s new leaders. All four of the major fund groups experienced net redemptions for the first time since mid-July, with the diversified global emerging markets equity funds posting back-to-back weekly outflows for the first time in over 10 months. Europe-domiciled emerging markets equity funds did, however, record net inflows for the 27th straight week.

Redemptions from gold funds continued to ease in mid-March as investors continued to favour sector fund groups in both the defensive and growth camps. During the week ending March 13 flows into EPFR Global-tracked financial and energy sector funds hit eight and nine week highs respectively while healthcare/biotechnology sector funds had their best showing in 41 weeks and consumer goods sector funds took in another USD300m.

YTD real estate sector funds remain the leaders when it comes to attracting fresh money, having absorbed nearly double the amount taken in by second placed financial sector funds, and healthcare/biotechnology sector funds stand third having already taken in more than they did during all of last year. In recent weeks flows into the latter fund group have tilted away from pure biotechnology funds in favour of funds focused on conventional healthcare plays.

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