Equity funds are “firmly” on track for their biggest collective outflow since 2011, latest data suggests.
EPFR Global said global flows to bond funds pushed the figure for the category’s assets under management to upwards of $60 billion (€53.03 billion) in the five days ending May 11, appearing to reverse the ‘Great Rotation’ thesis of recent times, which described the rotation out of bonds and into equities.
During the week, investors pulled $7.4 billion out of equity funds while committing $3.5 billion to bond funds and nearly $11 billion to money market funds. A recent rebound in dividend equity fund flows came to an “abrupt halt”, with this fund group recording its biggest outflow since late January, said EPFR.
Driving this latest shift are doubts about the effectiveness of the policies pursued by Japan and the Eurozone to kick-start economic growth, the erosion of corporate profit margins in the US and China and the structural issues dogging many of the major emerging markets, EPFR said.
Doubts, meanwhile, that the US rate hiking cycle will be anywhere near as deep or as long as previously expected has removed a major cloud hanging over many fixed income asset classes coming into 2016.
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