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Fund flows turn positive as global equity markets rebound, says EPFR Global

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The increased risk appetite evident the previous week continued building through mid-March as some EPFR Global-tracked equity fund groups posted their best performance numbers since ear

The increased risk appetite evident the previous week continued building through mid-March as some EPFR Global-tracked equity fund groups posted their best performance numbers since early December.

Investors pulled USD42.7bn out of money market funds, eclipsing the previous redemption record set in late 3Q 2008 following the reserve fund’s troubles, and committed fresh money to balanced funds for the first time in 32 weeks and to US equity funds for the first time in seven weeks.

Investors also resumed their contributions to high yield bond funds, parking USD388m with these funds.

Overall, investors committed a net USD2.1bn to equity funds and another USD1.15bn to bond funds during the week.

Among the major sector fund groups those focused on financials, energy, technology and commodities all posted solid inflows.

In addition to the eye catching money market fund numbers and the flows into high yield bond funds, there was a general improvement in the share of new money going to actively managed funds, says EPFR Global senior analyst Cameron Brandt.

At the country and regional level Brazil equity funds took in net inflows for the eighth straight week while India equity funds recorded their ninth consecutive week of outflows.

Among fund groups in the EMEA universe, Russia equity funds snapped a five week outflow streak but emerging Europe regional and Middle East and Africa regional equity funds recorded net redemptions for the tenth and 12th straight weeks.

The week ending 18 March saw US equity funds snap their six week outflow streak as a combination of not-as-bad-as-expected earnings reports and aggressive policy moves fuelled a market rally that boosted the combined portfolios of these funds by over nine per cent.

Small cap ETFs were the biggest money magnets, but actively managed large cap equity funds and mid cap equity funds also attracted fresh deposits.

Japan Equity Funds also benefited from the increased optimism in the US. Their portfolios were up 5.4 per cent, the biggest weekly gain since early November, as renewed buying of beaten down export plays lifted Tokyo’s benchmark Nikkei-225 equities index to a five-week high. That was not enough to stop this fund group posting outflows for the 23rd time in 24 weeks. But the USD165m investors pulled out was well below the USD223m weekly average during this period.

Outflows from Europe equity funds were even more modest, totalling only USD17m, despite the weaker performance numbers posted by this fund group during the third week of March. In another sign that investors are again thinking about future growth, regional funds with exposure to the UK also fared better than their ex-UK counterparts

All emerging market equity funds took in USD350.3m of net inflows during the week, their second straight week of inflows and reducing year to date total outflows to USD266.4m.

Latin America equity funds snapped their two week outflow streak as they took in fresh money for the ninth time in 11 weeks year-to-date. Asia ex-Japan equity funds also posted inflows, while the diversified global emerging markets equity funds recorded modest outflows and investors pulled money out of EMEA equity funds for the 31st time in the past 32 weeks.

EPFR says fixed income fund flows reflected a further rise in risk appetite going into the second half of March as high yield bond funds snapped a two week outflow streak and balanced funds, which invest in a mixture of equities and fixed income securities, took in new money for the first time in over seven months.

Emerging markets and global bond funds extended their redemption streaks while US Bond Funds, which ended 2008 with a 15 week losing run, took in new money for the 11th straight week.

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