Outflows for Europe stock, bond funds in week: EPFR

NEW YORK: Investors dumped European equity and fixed income funds in the week ended Sept. 14, unnerved by the unresolved Greek debt crisis and the potential for it to spread to other sovereigns, fund tracker EPFR Global said on Friday.

Net redemptions from European equity funds were $1.42 billion, pushing the year-to-date "total into negative territory for the first time as retail redemptions finally offset strong institutional commitments to German equity funds," EPFR wrote.

European bond funds had net outflows of $380 million, contrasting with a $2.54 billion net inflow into US bond funds.

Investors turned again to US municipal bond funds, pouring $405 million into the sector, the best showing in 48 weeks. They pulled $560 million out of high-yield bond funds.

Globally, in the course of the reporting week, net inflows for equities total $9 billion while bond funds pulled in a net $2.62 billion.

The totals for equity funds were skewed by one large exchange traded fund.

According to Lipper, a Thomson Reuters service, the State Street SPDR S&P 500 index ETF accounted for the majority of the cash moving into equity funds, with $12.5 billion worth of net inflow. This contrasts with the $10.3 billion in net redemptions the ETF suffered in the week ended Sept.7.

The ETF helped boost US equity fund net inflows to $12.31 billion, according to EPFR's data, in line with what Lipper reported on Thursday evening.

Money market funds were not the vehicle of choice for those seeking a safe haven. Investors pulled $16.7 billion in net outflows, EPFR said, breaking a five-week inflow streak.

Japanese focused funds had outflows of $281 million, while Asia ex-Japan had $647 million in net redemptions with EPFR ascribing much of that outflow to investors cutting "exposure to regional export plays".

The picture wasn't much better for emerging market equities, which cumulatively had outflows for a seventh consecutive week.

Dedicated long-only emerging market funds had net outflows of $1.32 billion while broadly diversified global emerging market funds (GEMs) had $185 million in net outflows.

Europe's emerging stock markets had outflows of $428 million.

Dedicated BRIC funds (Brazil, Russia, India, and China) had a minor outflow of $46 million, but it was the 22nd straight week of net redemptions.

Country specific funds for the BRICs, were mostly weaker. Russia had the largest with $314 million in outflows, a 10-week streak. China funds suffered $183 million in net redemptions while India had $149 million pulled out. Brazil bucked the trend with $31 million in net inflows, helped along by an interest rate cut to break a six-week outflow streak.

But not everything was bleak for emerging markets. Fixed income funds had a combined $558 million in net inflows with local currency bonds attracting an additional $276 million versus $244 million for the hard currency variety.

In the search for safety, commodity funds were one port of call, with $692 million in net inflows for funds specializing in gold and precious metals.

Healthcare/biotechnology funds pulled in a net $109 million while utility focused funds took in $51 million in fresh capital.

Risks to the global economy however kept a cloud over energy sector funds. Investors redeemed a net $750 million.

Copyright Reuters, 2011