Bond funds again took in money, absorbing a net $539 million for the week.
“Optimism is, it appears, hard to extinguish. In a week when US automakers lined up for more cash, Ireland was touted as a candidate for a sovereign default and banks in Emerging Europe cast a fresh shadow on their parent companies, flows into EPFR Global-tracked commodity sector funds accelerated, high-yield bond and Latin America equity funds extended their winning streaks, US equity funds managed for growth again outperformed their value counterparts and money market funds posted their first three-week outflow streak since mid-June,” EPFR said in a statement.
US equity funds again accounted for the bulk of the equity fund outflows, while US bond funds underpinned inflows on the bond fund side.
“Recent flow data for these two fund groups suggests that the balance between investors worried about deflation and those anticipating inflation may be swinging towards the former,” said EPFR senior analyst Cameron Brandt.
At the country and regional level, Brazil equity funds posted inflows for a fourth straight week. But flows out of Africa regional funds hit their highest level since the first week of 2008, while Emerging Europe regional funds posted outflows for the 34th time in the past 37 weeks and Middle East regional funds for the 28th time in the past 30 weeks.
All of the major EPFR-tracked equity fund groups geared primarily to developed markets posted outflows during the third week of February, with US equity funds surrendering the most in dollar terms and Japan equity funds in percentage terms.
Japan equity funds, which snapped a lengthy outflow streak the week before, posted net outflows of $278m and a collective portfolio loss of 5.04 per cent.
“Also, in contrast to the energy emanating from US President Barack Obama’s administration, Japan’s government is undermining domestic confidence with its perceived lack of urgency and its inability to push through a credible stimulus package,” Brandt said.
“In the US, a $790bn stimulus package has now been signed into law, although plenty of questions about how – and to what effect – it will be spent remain to be answered.”
Investors pulled $7.7bn out of US equity funds during the third week of February. But one giant exchange traded fund (ETF) accounted for most of those outflows – which raises the possibility of short-covering – and actively managed small and mid-cap equity funds again attracted modest inflows. Europe equity fund flows also proved resilient in the face of a fresh round of worries about the impact banks based in developed European countries will feel if their subsidiaries in Emerging European markets run into serious trouble. Outflows for the week were a modest 0.21 per cent of assets under management.
The two major diversified fund groups geared primarily to developed markets also saw money leave during the week. Global equity funds posted outflows of $339m pushing year-to-date outflows still over the $1bn, while investors withdrew a modest $5m from Pacific equity funds.