qe hopes act as boon for equity funds

Hopes for more quantitative easing in the near future saw equity funds post back-to-back weekly inflows for the first time since Mid-March, as redemptions from US investment grade bond funds hit a 13-week high.

qe hopes act as boon for equity funds


Cameron Brandt, director of research at EPFR Global, said: "The latest flows are consistent with expectations that central banks will step up to the plate again, putting more pressure on those holding cash and safe haven debt and boosting the attraction of riskier, more rewarding asset classes and tangible alternatives to paper currencies.

Safety-first strategies were still the order of the day for many investors, however, with US bond funds accounting for over three-quarters of the net $4.14bn absorbed by all EPFR Global-tracked bond funds while inflows into equity funds favoured diversified global and global emerging markets strategies.

Meanwhile, money market funds experienced their biggest outflow ($33bn) since the first week of August last year, as concerns about exposure to eurozone debt and fears already minimal returns will be driven lower by additional QE contributed to redemptions.

Canada, US, Japan and Germany equity funds all recorded inflows in excess of $650m in the week ending 20 June, although Japanese inflows were concentrated in a handful of domestically domiciled ETFs, suggesting the Bank of Japan have continued their asset buying programme.

On the bond side of the fence the most interesting development was inflows into local currency emerging market debt, their biggest since the fourth week of March, with funds dedicated to all three of the major regions – Asia, EMEA and Latin America – all witnessing fresh money.



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