qe hopes send market higher vol lower

Hopes of more accommodative measures by the US Federal Reserve and the European Central Bank drove equity prices higher and volatility measures lower last week, with emerging market equity funds benefiting from the subsequent jump in risk appetite.

qe hopes send market higher vol lower


EPFR Global said emerging market equity funds had extended their longest inflow streak since the first quarter, while high yield bond funds and emerging markets bond funds also took in fresh money for the tenth week running.

At the same time, more risk-averse sectors such as US equity funds and US bond funds posted back-to-back weeks of outflows for the first time since mid-May.

Last week the Vix index, which measures expected volatility priced into options on US equities and is also known as Wall Street’s “fear gauge”, fell to its lowest level in five years at 13.5.

Tristan Hanson, Ashburton’s head of asset allocation, said: “The current period of calm would certainly reflect an easing of European fears following Draghi’s remarks, but it may also reflect a calming of nerves over US profits and economic growth coming off the back of the Q2 reporting season and some very recent better economic data.”

Diversified global emerging markets equity funds were the major beneficiaries of the inflows into emerging market equity funds, while Asia ex-Japan and EMEA equity funds also saw modest inflows.

Latin America Equity Funds, on the other hand, recorded outflows for the seventh time in the past eight weeks.



Latest Stories