The final week of 2022 saw EPFR-tracked Bond Funds post consecutive weekly outflows for the first time since mid-October, capping a year when the overall group smashed its previous outflow record as central banks scrambled to contain inflation running at multi-decade highs.
Behind the headline number, however, was a marked shift from active to passive management.
A final look to EPFR-tracked equity funds in December 2022, with alternative, balanced, bond and money market funds experiencing significant redemptions as investors grapple with a highly uncertain outlook for the first half of next year.
Overall, the second week of December 2022 saw all Equity Funds record a collective inflow of $17.9 billion while Bond Funds absorbed $2.3 billion.
Given the raft of unsettling news and data thrown at them during the second week of July, investors showed considerable fortitude.
Against a backdrop of market volatility, slowing economic growth in Europe and North America, gasoline prices and mortgage rates in the US firmly above $5 a gallon and 5%, respectively, continued fighting in Ukraine and ongoing Covid-related disruptions to China-based supply chains, investors pulled over $45 billion from EPFR-tracked Equity, Bond, Alternative and Balanced Funds during the third week of June.
The Northern hemisphere’s summer solstice, which occurs on June 21, marks the day when it is light for the longest period. In the week preceding that date, however, investors could be excused for thinking the solstice marks the period of maximum darkness. The US Federal Reserve’s first 75-basis points rate hike since 1994, Russia’s invasion of Ukraine moving into its 17th week, Chinese authorities scrambling to contain a ‘ferocious’ outbreak of Covid in Beijing and an emergency meeting of the European Central Bank (ECB) kept global markets firmly on the back foot during the week ending June 15.
EPFR-tracked Equity Funds extended their longest run of outflows since 3Q19 during the week ending May 18 as slowing global growth, tighter monetary policy in the US, war in Ukraine and widespread lockdowns in China kept investors on the defensive. Bond, Money Market, Balanced and Alternative Funds also recorded outflows going into the second half of May.
As key US indexes closed their books on a month that saw the Nasdaq record its biggest drop since October 2008, investors seeking to escape market volatility turned to cash and to Chinese equity. Flows into EPFR-tracked Money Market Funds hit a 27-week high during the fourth week of April while China Equity Funds recorded their 15th inflow in the 17-weeks year-to-date and their biggest since late January.
With the opening weeks of the 1Q22 corporate earnings season raising more questions than it answers, US mortgage rates continuing to climb, global growth forecasts being trimmed and Russia’s invasion of Ukraine now in its third month, investors found a lot to like about the sidelines during the third week of April. Outflows from ERFR-tracked Equity Funds hit a year-to-date high for the second straight week while Bond Funds experienced net redemptions for the 14th time in the past 15 weeks.
Investors surveying the investment landscape during the second week of April saw more thistles and dandelions than daffodils. Things in their field of view included US headline inflation hitting its highest level since 1981 and US mortgage rates their highest level since 2011, Sri Lanka defaulting on its foreign debt and Russia’s invasion of Ukraine stretching into its eighth week.
