US investors have driven record setting flows into bond funds this year, which continued in the last week of November.
Figures from data firm EPFR showed flows of over $575 billion (€484 billion) into bond funds this year, with a month left to go as most of the major fund groups by geography and asset class posted inflows.
European bond funds took in over $1 billion for the fourth time in the past five weeks, US bond funds took in fresh money for the 46th time in the 48 weeks year-to-date and global bond funds added $1 billion to their year-to-date total.
This contrasts with last year when bond funds posted outflows for eight straight weeks during November and December of 2016 as they struggled to position themselves for the reflationary agenda promised to US president-elect Donald Trump.
With a month to go, the collective performance of EPFR-tracked bond funds year-to-date continues to lag that of equity funds by a significant margin but money keeps flowing into bond funds.
Fund research firm Informa Financial Intelligence’s chief macro strategist David Ader believes that this is due in part to investors cashing in gains from equity positions and shifting the money to fixed income asset classes.
European bond funds benefited from the perception that Germany is making progress towards forming a government, the EU and UK are making progress towards a Brexit deal and that the latest economic recovery has real momentum.
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