Investors ditch global equities for US, emerging bonds: EPFR

Investors ditch global equities for US, emerging bonds: EPFR

Hong Kong: Investors slashed their equity holdings and poured money into US and emerging market bonds and commodities last week on lingering fears that global growth will be hit by Europe’s debt problems, EPFR Global said on Friday.

Equity funds saw outflows of $2.61 billion in the week to 9 June, while bond funds took in $3.8 billion in fresh money, the research firm said in a report.

Money market funds, an equivalent of cash, absorbed a net $9.63 billion.

US payrolls added fewer jobs than expected last month, when government census hiring accounted for much of the hiring, spreading doubts about the growth outlook.

However, EPFR also said the pace of fund redemptions slowed significantly from late May, suggesting a rush to dump riskier assets since April may have run its course.

Emerging market equity funds

Global emerging market equity funds posted inflows for a second consecutive week, though Asia ex-Japan funds had record outflows for the fifth time in the past six weeks.

Korea-focused funds had their biggest outflow in 66 weeks.

Europe, Middle East and Africa-focused funds snapped a five-week outflow streak, with investors mainly attracted by low valuations in Russian stocks.

Developed market equity funds

US, European and Japanese equity fund groups all posted outflows for the week.

A net $1.81 billion left U.S. stock funds, with outflows driven by small cap funds.

Japan funds saw $227 million out the door in the same week that Prime Minister Naoto Kan took office.

Sector funds

Commodity sector funds took in more than $1 billion in the latest week, thanks to an insatiable hunger for gold as investors looked for havens from the broader market turmoil.

Investors also committed $299 million to technology funds, a hopeful sign for equity bulls because of the fund group’s sensitivity to business cycles.

Consumer goods sector funds were rocked by outflows of $800 million.

Bond funds

High-yield bond funds continued to be hit with redemptions, with a $6.27 billion leaving the fund group in the last five weeks.

US bond funds, though, extended an inflow streak to 65 weeks. Emerging market bond funds and global bond funds also saw inflows.