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High yield bond funds see rare outflows but EM funds extend winning streaks

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EPFR Global-tracked Europe equity funds saw their three week inflow streak come to an end last week, while US equity funds posted their second consecutive weekly outflow.



Flow data from the week ending 3 October also suggested that recent moves by central banks have prompted investors to reassess their strategies for maximising yield in such a low interest environment.

Dividend equity and high yield bond funds posted outflows for the first time since June while commitments to mortgage backed bond funds hit a 17 week high. Socially responsible investment funds had their best week since late 1Q12 and both emerging market equity and bond funds attracted over USD1bn.

Overall EPFR Global-tracked bond funds took in a net USD5.5bn for the week, taking year-to-date inflows over the USD340bn mark.

Equity funds recorded an outflow of USD1.1bn. Redemptions from money market funds totalled USD15.7bn and were driven by record setting outflows of over USD17bn from Europe money market funds.

Michael Krasner of EPFR Global’s sister company iMoneynet says: "We’ve see a pretty steady decline [in European Money Market Fund assets] since the ECB rate cut of July 5 (to zero for the deposit facility rate). Since then some euro funds have limited investments of new cash, shut off funds to new investors entirely, and some funds have been liquidated and closed. It looks as if the rate action put significant pressure on companies running these funds."
 

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