With better than expected US data triggering visions of less quantitative easing by the New Year, there was an appreciable tapering of flows into many EPFR Global-tracked equity and bond fund groups during the week ending 4 December.
Among the fund groups taking in less money – or posting bigger outflows – than the previous week were US, Japan, Europe, and emerging markets equity funds and Europe, global, US, high yield and Asia-Pacific bond funds.
Overall, investors pulled a net USD2.03bn out of equity funds, which experienced their fifth straight week of retail redemptions, and USD376m from bond funds while money market funds, a proxy for cash, saw over USD31bn flow in.
Dividend equity funds posted inflows for the eighth time in the past 10 weeks, but the amounts committed maintained the broad downward trend since flows peaked in late 1Q13.
Investors were active at the country level. They snapped Italy equity funds’ inflow streak, extended Spain equity funds’ to 19 weeks in a row, committed the most money to Germany equity funds since 2Q12 and pulled record setting amounts out of Brazil bond funds.
Fears that the US Federal Reserve will decide to start winding down its current quantitative easing programme (QE3) later this month kept the pressure on EPFR Global-tracked emerging markets equity funds during the first week of December. The diversified global emerging markets (GEM) equity funds again bore the brunt of the redemptions while Latin America and EMEA equity funds posted net outflows of around USD220m and Asia ex-Japan equity funds eked out modest inflows.
As has been the case for much of the year, commodities sector funds experienced the biggest redemptions in dollar terms as softer commodity prices, expectations of tighter US monetary policy and the continuing flight from gold funds pushed YTD outflows close to the USD35bn mark. Energy sector funds also experienced outflows, although energy master limited partnerships (MLPs) attracted fresh money for the 47th time in the 48 weeks YTD as investors gravitate towards the cash flow and returns offered by these fund vehicles.
Elsewhere, flows into infrastructure sector funds hit their second highest weekly total of the year and industrial sector funds took in fresh money for the 16th time in the past 20 weeks, real estate sector funds took in fresh money despite concerns about higher US interest rates and healthcare/biotechnology sector funds maintained their position as the best performing of the 11 major sector fund groups YTD.
