For EPFR-tracked Energy Sector Funds, that fear translated into the biggest weekly inflow since late October 2023, when the surprise attack on Israel by Hamas also triggered fears of a hit to global energy supplies. Data from EPFR sister company CEIC suggests that non-OECD countries will be hardest hit if oil prices spike.
Investors looking to cut risk and seek safety steered another $2.5 billion into Physical Gold Funds and $1.8 billion into Municipal Bond Funds, hit Israel Equity Funds with their biggest outflow since mid-March, pulled money out of Germany Equity Funds for the third time in the past five weeks and extended Leveraged Equity Funds’ longest outflow streak in over four years.
Despite growing American involvement in Israels efforts to destroy Iran’s nuclear program, flows into US Equity Funds during the week ending June 18 fell just shy of the $40 billion mark. That is consistent with earlier spikes seen ahead of the ‘quadruple witching’ options expiry dates that occur four times a year.
Overall, the third week of June saw all EPFR-tracked Equity Funds absorb a net $45.4 billion while Bond Funds attracted $18.6 billion and Alternative Funds $5.8 billion. Redemptions from Balanced Funds totaled $1.2 billion and $11.7 billion flowed out of Money Market Funds.
At the asset class fund level, Physical Silver Funds recorded their sixth consecutive inflow, Cryptocurrency Funds attracted fresh money for the eighth time over the past nine weeks, flows into Dividend Equity Funds climbed to a three-month high and the current inflow streak for Momentum Funds hit 10 weeks and $4.7 billion.
Emerging Markets Equity Funds
With the diversified Global Emerging Markets (GEM) Equity Funds posting their biggest inflow since 1Q23 and Latin America Equity Funds adding to their eye-catching streak, EPFR-tracked Emerging Markets Equity Funds ended the third week of June firmly in the black. It was the third time during the past month that all four of the major regional groups recorded inflows.
When it came to domicile, Emerging Markets Equity Funds based in Europe chalked up their eighth collective inflow over the past nine weeks while US domiciled funds tallied their biggest inflow since early 4Q24 and Japan domiciled funds recorded their 18th outflow year-to-date.
Investors who utilize Hedge Funds continue to shun emerging markets exposure. Since the beginning of the decade, they have redeemed some 15% of these vehicle’s AUM while conventional EM Equity Funds have enjoyed inflows equal to 25% of their 1Q20 AUM.
With the focus during the latest week on the Middle East, EMEA Equity Funds recorded their fifth consecutive inflow with funds dedicated to South Africa, Saudi Arabia and Russia making the biggest contributions to the headline number. In the case of Russia Equity Funds, the latest inflow was the biggest year-to-date. Poland-mandated funds, meanwhile, posted their first outflow since early April.
Among the Asia ex-Japan Country Fund groups, China and India Equity Funds both tallied modest inflows while Thailand Equity Funds’ current redemption streak pushed deeper into its 18th month. But the average GEM Equity Fund allocation to Thailand, which hit a 52-month low coming into March, has now climbed for two straight months.
Flows to Latin America Equity Funds are increasingly focused on funds dedicated to Brazil, the region’s biggest economy and the world’s ninth largest oil producer. Elsewhere, Argentina Equity Funds posted their biggest outflow in % of AUM terms since 4Q23 and on record in cash terms despite recent data showing the country’s inflation rate falling to a five-year low.
Developed Markets Equity Funds
Flows into EPFR-tracked Developed Markets Equity Funds soared during the week ending June 18. But technical trading around the expiry of major US options classes accounted for much of the headline number. With conflict in the Middle east escalating rapidly, flows to Japan, Europe, Pacific Regional and Canada Equity Funds ranged from modest to negative.
Investors did show some appetite for diversified exposure, with Global Equity Funds taking in over $5 billion. Nearly all of that money went to funds with ex-US mandates.
US Equity Funds, meanwhile, posted their biggest collective inflow since mid-December. Foreign domiciled funds took in fresh money for the third straight week and eighth time during the past 10 weeks. Small Cap Growth Funds extended their current run of outflows, which stretches back to the final week of last year, but flows into Small Cap Value Funds climbed to 26-week high.
Investors committed fresh money to Europe Equity Funds for the 17th time since mid-February, with the bulk of the inflows going to the two major regional groups and dedicated Switzerland Equity Funds. But concerns that a fresh energy shock will put additional pressure on key industries sapped enthusiasm for Germany mandated funds and three of the four groups dedicated to Nordic markets posted outflows ranging from $3.5 million for Finland Equity Funds to $247 million for Sweden Equity Funds.
With Japan importing over 90% of its annual oil consumption, investors pulled money out of both Japan and Pacific Regional Equity Funds, with the latter racking up their biggest outflow since early 4Q23.
Global sector, Industry and Precious Metals Funds
For the first time in roughly nine months, nine of the 11 major EPFR-tracked Sector Fund groups reported inflows despite the geopolitical chill that descended on markets in mid-June. Commodities/Materials and Financials Sector Funds were the only groups to post outflows during the week ending June 18.
Energy Sector Funds stood out as investors redid their supply and demand calculations in light of Iran’s threat to close the Straits of Hormuz, chalking up their largest inflow in 86 weeks. Daily inflows spiked on Monday, helping the group snap a 13-week redemption streak and post back-to-back weekly inflows for the first time since early 3Q24. Within the headline number was over $100 million collectively flowing into Energy SRI/ESG Funds, which posted their second consecutive weekly inflows for the first time since late 3Q23. For over a year, flows for this group have been in negative territory.
At a more granular level, flows and performance for dedicated WTI Oil Funds have climbed steadily since Israel’s first strike on Iranian nuclear facilities.
The latest inflow for Industrials Sector Funds extended their streak to 10 weeks and pushed the total over that run to more than $5 billion. Continuing to support the broader sector are Aerospace & Defense Funds. The group took in fresh money for the 17th consecutive week with the latest hitting above the $1 billion mark.
Elsewhere, Infrastructure Sector Funds enjoyed their biggest inflow in three years as investors pumped over $600 million into this group, Healthcare/Biotechnology Sector Funds snapped a 14-week outflow streak and Technology Sector Funds tallied their third inflow of the past seven weeks. Technology Leveraged Funds – those with heightened exposure – posted their third consecutive outflow above $1 billion, and also their seventh outflow of the past eight weeks.
Bond and other Fixed Income Funds
The money kept flowing into EPFR-tracked Bond Funds in mid-June as geopolitical concerns increased the premiums on safety and predictability. The headline number was the fifth highest year-to-date, with US, Europe and Emerging Markets Bond Funds each taking in around $5 billion and Global Bond Funds extending their longest run of inflows since 4Q24.
Along with junk bonds, European and global debt currently occupy the top quintile of EPFR’s weekly Multi Asset Rankings. At the beginning of the year, those slots were filled by floating rate debt, European bonds and short term US Treasuries.
Concerns about duration risk continue to weigh on managers of multi asset funds, with long term US sovereign debt tumbling down the rankings. Ultra Short Term Bond Funds, meanwhile, took in over $1 billion for the ninth straight week.
The latest week was another good one for Emerging Markets Bond Funds which, buoyed by the second largest total on record for China Bond Funds, posted their biggest inflow since 3Q16 when investors were pivoting away from negative interest rates in Europe.
Short term interest rates in Europe have been falling since last year and, in the case of Switzerland, have even turned briefly negative, but investor appetite for exposure to the region remains strong. In recent weeks, that appetite has been focused on investment grade corporate debt. During the latest week, Europe Corporate Bond Funds absorbed more money than their sovereign counterparts for the seventh week running, with the former taking in over $9 for every $1 committed to Europe Sovereign Bond Funds.
Foreign domiciled US Bond Funds posted their sixth outflow since the beginning of April, but those redemptions were handily offset by flows into domestically based funds.
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