Investors have pulled out of money market funds and gone to emerging market equity, United States growth and high-yield bond.
According to data by EPFR Global, which provides fund flows and asset allocation data to financial institutions around the world, the equity funds collectively surrendered $4.42 billion (Dh16.1bn) for the week ending February 4, while bond funds absorbed a net $739 million.
The data for equity funds in general and Europe Equity Funds in particular were influenced by ETF activity.
Money Market Funds, meanwhile, experienced the strongest weekly outflow since their stability was called into question last September, but the outflow was due to just a couple of funds by a single investment management firm that accounted for the bulk of the $21.4bn outflows posted by the fund group.
Among the other bullish signs in the flow data were a 10th straight week of flows into high-yield bond funds, the outperformance of US equity funds managed for growth relative to their value counterparts and the modest inflows posted by three of the four major emerging markets equity fund groups
Outflows from Europe Equity Funds exceeded those from their US counterparts. But, for the second week running, that overall data was hugely influenced by "Shares DivDAX," a Germany listed ETF.
The $2.1bn pulled out of this fund swamped modest net inflows into Europe and Europe ex-UK Regional Equity Funds. European equity valuations remain cheap compared to their peers. But Germany and Japan, another export dependent economy, is producing equally dire macroeconomic numbers as exports slump and a deteriorating labour market cuts into domestic consumption.
Investors pulled money out of Japan Equity Funds for an 18th straight week, taking year-to-date outflows over the $1bn mark.
For the second week running the two geographically diversified fund groups focused primarily on developed markets took very different measures. Pacific Equity Funds took in fresh money for fourth time in five weeks, while investors pulled $215m out of Global Equity Funds.
During early February the diversified Global Emerging Markets (Gem), Asia ex-Japan and Latin America Equity Funds all posted modest inflows – the latter for the fifth straight week – while EMEA Equity Funds recorded outflows for the 30th week in a row. Investors again showed a preference for country over regional exposure, with flows into Asia ex-Japan and Latin America Equity Funds driven by Korea and Brazil Equity Funds respectively.
Flows into EMEA Equity Funds continue to suffer because of the dependence on oil revenues of Russia and the Middle East, the dependence on faltering Eurozone growth of Turkey, the Baltic Republics and CE3 markets and the political uncertainty dogging South Africa.
Commodity Sector Funds, meanwhile, also benefited from declining interest rates and the inflationary risks some investors see when lower rates and huge fiscal stimulus packages begin to take effect.
EPFR Global-tracked Commodity Sector Funds absorbed a net $252m, their eighth consecutive week of net inflows, with funds geared to gold and precious metals attracting the most attention.
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