Europe bond funds post biggest weekly inflows in two years
From Europe Jan 24 2012 BY: Simon Danaher
, Online News Editor
, International Adviser
Europe bond funds posted their biggest weekly inflows in more than two years last week, as sentiment towards the eurozone turned less negative on hopes it may at last get to grips with its debt problem.
EPFR Global said inflows into the sector were bolstered by the IMF’s request last week for more funding, suggesting the eurozone may be able to get a handle on the debt crisis soon. In contrast, Europe equity funds saw continued outflows, suggesting that while investors believe debt may be a good place to be, they feel Europe may still be heading towards recession this year.
Meanwhile, China equity funds posted their biggest weekly inflow in over two years, flows into dedicated BRIC equity funds climbed to a 60 week high and Latin America equity funds enjoyed their best week since late July.
In other emerging market fund groups, GEM equity funds took in over $1bn (£640m, €770m) during the week for the second week running and flows into BRIC funds hitting a seven-week high.
US equity funds continued to dominate flows into developed market equity funds, building on a trend which began at the tail end of last year, while German Equity Funds matched their longest redemptions streak since the second quarter of 2008.
Overall, EPFR Global-tracked bond funds absorbed a net $4.35bn and equity funds $2.8bn while money market funds posted outflows of $11.93bn.
“Investors are starting to pencil in a lot of quantitative easing, interest rate cuts and fiscal stimulus to their assessment of the global economy’s prospects, with all that means for growth, yields and inflation,” said EPFR Global director of research Cameron Brandt.
“They remain wary of equities. But flows into higher yielding forms of debt are picking up and inflation protected bond funds have posted inflows 10 of the past 12 weeks that total over $2bn.”