Global Navigator: Investors still searching for elusive fix

What narrative to back? The developed markets reflation story? An increasingly green future? A fairytale financial universe populated by cryptocurrencies and meme stocks? A gothic novel featuring higher taxes, inflation and state intervention?

The search for direction during the first week of June saw investors commit over $5 billion to the two major EPFR-tracked multi asset fund groups, increase their exposure to Europe’s gathering rebound, add to their inflation hedges and extend lengthy inflow streaks for a number of fund groups with socially responsible (SRI) or environmental, social and governance (ESG) mandates.

US Equity Funds, however, saw their record-setting run of inflows come to an end as the focus shifted from America’s strong growth to May’s headline inflation number – it came in at 5%, the highest since 2008 – and the higher taxes that currently seem inevitable. Municipal Bond Funds saw flows hit a 17-week high as they recorded their 22nd inflow year-to-date, TIPS Bond Funds racked up their 36th consecutive inflow and US Bank Loan Funds absorbed fresh money for the 23rd straight week.

Overall, EPFR-tracked Bond Funds recorded a collective inflow of $12.4 billion during the week ending June 9. Equity Funds took in a net $1.5 billion, a number that would have negative but for flows into SRI/ESG Funds, with Dividend Equity Funds posting their 13th inflow in the past 15 weeks. But YTD net flows into all Equity Funds have already exceeded the current full-year record of $358 billion set in 2013. Three out of every four dollars committed by equity investors so far this year have gone to Equity ETFs.

Graph depicting the 'Year-to-date flows, in US million dollars, for major fund groups, mutual funds versus ETFs'.

Graph depicting the 'Cumulative flows and performance for foreign and domestically-domiciled Korea equity funds, from 2015 to date'.

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Flows into EPFR-tracked Emerging Markets Equity Funds during the third week of January climbed to their highest level since mid-1Q21 as investors positioned themselves for China’s much anticipated economic rebound and, the anti-inflation rhetoric of the Federal Reserve and European Central Bank (ECB) notwithstanding, an early end to the current interest rate cycles in the US and Europe. Investors also steered $2.5 billion – a 101-week high – into Emerging Markets Bond Funds.

Global Navigator: Emerging markets funds | Mid-January

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Flows into EPFR-tracked Emerging Markets Equity Funds during the third week of January climbed to their highest level since mid-1Q21 as investors positioned themselves for China’s much anticipated economic rebound and, the anti-inflation rhetoric of the Federal Reserve and European Central Bank (ECB) notwithstanding, an early end to the current interest rate cycles in the US and Europe. Investors also steered $2.5 billion – a 101-week high – into Emerging Markets Bond Funds.

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