Redemptions from China equity funds surge as trade tensions resurface

The prospect of a second major spike in Sino-US trade tensions cast a shadow over markets and some fund groups in mid-May. EPFR-tracked China Equity Funds posted their biggest weekly outflow since early 3Q15 as US President Donald Trump threatened China with new trade sanctions if it does not boost its imports from the US and allow independent investigation of the origins of the Covid-19 pandemic. Redemptions from all Emerging Markets Equity Funds, meanwhile, exceeded $3 billion for the fourth week running.

Faced with a new source of uncertainty, already cautious investors steered another $35 billion into Money Market Funds while flows to US Bond Funds climbed to a 13-week high and Japan Equity Funds recorded their third largest inflow year-to-date.

US Bond, Money Market and Japan Equity Funds all feature on the list of fund groups that have seen the largest inflows quarter to date, along with Leveraged Bear, High Yield Bond and SRI/ESG Equity Funds and a handful of major Sector Fund groups.

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