Investors committed a record $2.98 billion to global bond funds and pumped more money into U.S. and Japanese equities in the last week, but continued to pull money out of European stocks amid Greece’s debt crisis, data from fund tracker EPFR Global showed on Friday.
Eager for higher returns, investors pulled another $34.9 billion out of low-yielding money market funds in the week ended March 31, taking net outflows from such funds to $297.5 billion in the first quarter.
The surge of cash into riskier assets has helped push U.S., European and Japan stock markets to 18-month highs.
For a list of how global markets performed in the first quarter, click [ID:nLDE62S0QM]
Total flows into all bond funds were $6.5 billion for the week, while all equity funds took in a combined $2.47 billion.
“Investors looking at equity, which is still taking a back seat to fixed income, are giving the U.S., Japan and other developed markets another look,” EPFR Global Senior Analyst Cameron Brandt said in a news release.
“While inflows into developed market equity funds in the quarter were a modest $3 billion, it was quite a different story than the record $58 billion of outflows from these funds for the same period in 2009.”
EMERGING MARKET EQUITY FUNDS
Emerging market equity funds ended March with their seventh consecutive week of inflows, bringing net inflows to nearly $7.6 billion in the first quarter.
All four of the major fund groups took in modest amounts of fresh money, ranging from a net $6 million for Latin America Equity Funds to $222 million for EMEA Equity Funds.
China equity funds, however, recorded inflows for only the third week so far this year as some investors continue to be put off by rich valuations, growing exchange rate and trade frictions with the United States and uncertainty about just how far authorities will go to prevent a property bubble.
GLOBAL EQUITY FUNDS
Global equity funds took in $687 million in the week. These funds, whose top three country allocations include the U.S. (22%), the UK (12%) and Japan (10%), now have year-to-date inflows of more than $8 billion.
U.S. EQUITY FUNDS U.S. equity funds saw their eight straight week of inflows, their best period of inflows since late 2004, on a steady stream of moderately improving economic data. For the quarter, however, these funds saw net outflows of $5.7 billion.
JAPAN EQUITY FUNDS Investors committed another $744 million to Japan equity fund in the final week of March — the biggest weekly tally since February 2007 — on expectations that fiscal and monetary policy will remain loose due to persistent weakness in the domestic economy. The funds saw $3 billion in fresh money in the quarter.
EUROPEAN EQUITY FUNDS Europe equity funds were the only big developed markets fund group tracked by EPFR Global to post outflows, extending their losing streak to eight weeks on concerns about Greece’s fiscal crisis and its effect on the euro zone. Western Europe focused funds saw net outflows of $4.5 billion in the quarter.
SECTOR FUNDS
Global sector funds took in a collective $593 million for the week. Consumer goods sector funds, perceived as a defensive play, ended the quarter as the biggest money magnet, attracting $1.4 billion, although the week ending March 31 saw them surrender a net $109 million.
COMMODITY SECTOR FUNDS
Commodity sector funds were buoyed by news of the change in the way iron ore will be priced, and ended March by posting inflows for the fourth time in five weeks. On the quarter, however, they saw net outflows of $158 million.
BOND FUNDS
U.S. bond funds took in fresh money for the 65th consecutive week, dominated by funds investing in short-term debt, while global bond funds had their best week since EPFR Global started tracked them.
High yield bond funds took in another $972 million in the latest week, while emerging market bond funds extended their current inflow streak to 21 weeks and $11.7 billion.
About $71.7 billion was pumped into all bond funds in the quarter. (Reporting by Kim Coghill; Editing by Jan Dahinten)
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