Investors Dump U.S. Equity Funds, Shift Back Into Bonds

Feb 7 2014, 5:14pm CST | by

Investors Dump U.S. Equity Funds, Shift Back Into Bonds

U.S. investors sold mightily out of equity funds in the first week of February and are rotating back into bonds, the fund tracking firm EPFR Global said on Friday.

Institutional redemptions from EPFR Global-tracked U.S. equity funds and commitments to U.S. bond funds both set new records in dollar terms going into February as markets around the world continue to struggle with the shift in monetary policy, China’s slower growth and the cautious tone of the latest corporate earnings forecasts.

EPFR said this “mini-rotation” by institutional investors meant a new inflow record for all bond funds and a new outflow record for all equity funds during the week ending Feb. 5.  In all, outflows from all equity funds totaled $28.3 billion, with emerging markets equity funds accounting for a fifth of that total. Meanwhile, investors poured a net $14.7 billion of fresh money into bond funds.

When measured in percentage of assets under management terms the flows into bond funds were the biggest since early second quarter 2010 and the redemptions from equity saw the largest sell off since the third quarter of the same year. Institutional commitments to all bond funds, in these terms, hit levels last seen in the first quarter of 2006, EPFR said.

Outflows from U.S. equity funds during the first week of February dragged the overall number for all EPFR Global-tracked developed market equity funds to its lowest level since the week ending June 25, 2008, when net redemptions hit $23.7 billion.

Bonds are definitely back, thanks to talk of Fed tapering. But that depends on who is issuing the debt.

Flows into EPFR Global-tracked bond funds rose during the week ending February 5  with Treasury bond funds attracting fresh institutional commitments.  However, investors continued to sell Asian and emerging market  bond funds.  Plus a weekly outflow of $1.2 billion was registered in high yield funds in general. With the weak growth and talk of deflation putting European central banks under pressure to loosen monetary policy, flows into European bond funds hit a 40 week high.

Source: Forbes Business

 
 
 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

NASDAQ is Back at 2000 Dot-Com Bubble Level
NASDAQ is Back at 2000 Dot-Com Bubble Level
The Dot-Com force is back at the NASDAQ. It took Silicon Valley 15 years to bring back the NASDAQ to the Dot-Com Bubble Levels. With startup valuations in the billions becoming the norm, Wall Street is following up with driving up the value of public traded tech companies.
 
 
Bill Gates Tops Forbes Billionaires List Again
Bill Gates Tops Forbes Billionaires List Again
Microsoft co-founder Bill Gates is back on top of the Forbes Billionaires list.
 
 
$75,000 Apple Watch revealed
$75,000 Apple Watch revealed
When Apple's designs are not exclusive enough then there are 3rd parties who add gold and diamonds to the iGadget to make them precious. Brikk announced the Lux Watch, a diamond studded version of the Apple Watch.
 
 
Sony will not Sell Off TV And Mobile Spinoffs
Sony will not Sell Off TV And Mobile Spinoffs
Sony President Kazuo Hirai clarified on Wednesday that the company will not immediately sell off the spun out TV and mobile phone business.