In the week ending June 12, French equity funds had their 20th consecutive outflow, while UK equity funds extended an outflow streak from November. UK bond funds saw their largest outflow in over 22 months, reflecting market reactions to anticipated political changes, according to fund flow data provider EPFR.
According to the research, the political landscape in Europe remained a critical factor, particularly with the ongoing repercussions of the European Parliamentary elections. Despite the potential risk of Marine Le Pen’s National Rally Party gaining control in France, it is the near certainty of the UK transitioning to a left-of-centre labour party government that has had a more pronounced impact on investor behaviour.
UK’s “ailing image” prompts equity funds’ outflows in January
During this period, EPFR-tracked equity funds pulled in $6.2 billion. Alternative funds attracted a net $2 billion, bond funds saw $10.2 billion in inflows and money market funds surged with $40.3 billion, according to the data. Conversely, balanced funds continued their outflow trend, surrendering another $1.5 billion.
Investors also focused on the new tariffs on Chinese electric vehicle exports to Europe. This development led to significant outflows from Korea equity funds, the largest since the second quarter of 2022. Japan equity funds added to their longest outflow streak this year, and Germany equity funds saw their 43rd outflow since the beginning of the third quarter of 2023.
European investors stick with bond funds amid inverted yield curves
On the other hand, China money market funds saw inflows climb to a 20-week high. Portugal and Norway equity funds reached levels last seen in the late fourth quarter of 2023 and early third quarter of 2023, respectively, while Israel equity funds posted their biggest outflow since mid-April.
The findings also showed that cryptocurrency funds continued their positive trend, attracting fresh money for the sixth consecutive week. Mortgage-backed bond funds extended their longest inflow streak since 2019, and physical gold funds marked their fourth inflow in five weeks, reflecting sustained investor interest in diverse asset classes amid varying market conditions.
