Bond funds saw their largest inflows globally for two years last week as investors “put safety over returns”.
Bond inflows were $15.9 billion (€18 billion) in the week end June 7, and US bond funds climbed to a 17-week high with every sub-sector seeing net new money, according to EPFR Global, which tracks fund flows.
The strong flows came despite market expectations of an interest rate hike when the Federal Reserve meets later this week.
Other concerns for investors were North Korea’s latest missile test and the stalling of US President Donald Trump’s economic agenda.
Investors pulled more money out of US equity funds and moderated their commitments to Europe equity funds during the seven days.
However, though UK equity funds saw another week of heavy redemptions ahead of the June 9 election, Europe equity funds overall posted net inflows for the 11th straight week as funds with broad regional mandates continued to attract fresh money.
EPFR Global said investors continued their recent rotation to European assets, with combined inflows for Europe equity and bond funds adding up to $2.6 billion.
Investors were generally cautious about taking on single country exposure, although France equity funds did see inflows hit a four-week high on the back of expectations that the ruling En Marche party would win a majority during the two-rounds of legislative elections this month.
Emerging markets equity and bond funds were having their longest inflow streak since the first quarter of 2013, posting inflows in excess of $2 billion for the ninth time in the 23 weeks year-to-date.
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