Money market funds flowed out to equity funds in the last week of March as emerging markets remained investor favourites, according to data released by EPFR Global – which provides fund flows and asset allocation data to financial institutions around the world.
Money market funds posted about $9 billion (Dh33bn) of outflows as investors moved out of cash for a fourth straight week, taking the amount they have removed from this fund group during the first quarter of 2009 over the $30bn mark.
The $1.2bn of emerging market equity fund inflows in the week ending April 1 were dominated by the geographically diversified global emerging markets equity funds, which took in a net $868 million, while high yield bond funds absorbed $796m of the $828m committed to bond funds during the week, the data showed.
US and Japan equity funds were actually worse on a percentage of assets under management basis compared to the 2008 first quarter. The flows into emerging markets equity funds have swung from deeply negative to positive.
While the global emerging markets equity funds remained investor favourites going into the second quarter, extending their winning streak to 10 straight trading days, Asia ex-Japan equity funds enjoyed inflows of $371m for the week ending April 1. But flows into Latin America equity funds were slightly negative for the week as the latest economic data from Brazil pointed to another downgrade in 2009 growth expectations and undermined hopes of a strong recovery in the second half of 2009. Europe, the Middle East and Africa equity funds also had trouble shaking off concerns about the fiscal health of the CE3 markets and recorded modest net outflows during the week.
At the country and regional level, flows into China and Russia equity funds were positive to the tune of $137m and $29m respectively and Brazil, Russia, India and China (BRICs) equity funds posted inflows for the third time in the past four weeks. For the 2009 first quarter as a whole, Brazil equity funds took in $648m and Greater China funds $256m while Russia and Taiwan equity funds, which both absorbed over $1bn in the first quarter of 2008, recorded outflows of $38m and $133m respectively.
During the past two days of March, investors pulled $3.8bn out of US equity funds, although the weekly flows finished only $1bn under water. Europe equity funds registered slight inflows during the week, their second straight weekly inflow. And the outflows from Japan equity funds were the 25th in the past 26 weeks.
Having snapped a five week losing run the week before, global equity funds posted another week of inflows amounting to $577m while the other major diversified fund groups geared primarily to developed markets, Pacific equity funds, recorded solid inflows for a second straight week.
SECTOR FUNDS
Technology sector funds continued to attract money during the final week of March, absorbing a net $173m. But other sector fund groups geared to growth had a bumpier ride in the face of fresh data showing just how severe the current global economic downturn has become. Commodities sector funds, which saw year-to-date inflows move north of $3bn during the week ending March 25, saw a six-day inflow streak end March 30. But the fund group managed to record net inflows of $345m during the week.
On a quarterly basis, Commodities sector funds fared best in terms of attracting fresh money, followed by energy and real estate sector funds. The biggest shifts quarter-on-quarter occurred with financial sector funds, which took in $6.1bn in the first quarter of 2008 and surrendered $1.3bn in the 2009 first quarter, and technology sector funds.
BOND FUNDS
Net year-to-date flows into high yield bonds pushed over the $4bn mark in late March with their nearly $800m of weekly net contributions, but emerging markets bond funds were not able to sustain the recent momentum that allowed them to post inflows for only the second time in the past 33 weeks during the week ending March 25. In the latest week investors pulled $141m from these funds.
Flows into other fixed income fund groups also hewed to overall pattern for the 2009 first quarter. Global bond funds posted another week of outflows of $285m. These funds have posted outflows every week this year..
Flows into US bond funds remained positive, albeit at a slower pace and with the bulk of the flows going to funds that do not invest in municipal debt.
Balanced funds, which invest in both equity and fixed income, recorded outflows of $205m during the last week of March. During 2008 redemptions from these funds averaged $538m compared to $353m a week during the 2009 first quarter.
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