Inflows into high-grade funds slow down

According to BofA Merrill Lynch Global Research report, High grade funds recorded their 30th week of inflows. However the pace has been slowing down notably over the past couple of weeks. High yield funds flows remained positive for a second week; but again the inflows has been slowing down w-o-w. As shown in chart 13, inflows were coming exclusively from global HY funds while the US and European focused high yield funds recorded small outflows.

Government bond funds flows strengthened w-o-w, to the strongest inflow in five weeks. Money market funds flows jumped back strongly into positive territory after a negative dip last week. The latest inflow was the largest in 13 weeks.

“European equity funds recorded another outflow, the 35th in a row. Equity funds have suffered outflows of 9% of AUM so far this year; however the pace of outflows has been decreasing slowly” says BofA Merrill Lynch Global Research report.

Chart 1: Flows into IG funds have been slowing down

EM global debt funds continue to see strong inflows as the reach for yield trend remains in vogue. The asset class has seen 14 weeks of uninterrupted inflows; and the last two weekly flows were both in excess of $2bn. Commodity funds also recorded another weekly inflow, the sixth consecutive one, remaining on a positive trend.

“Looking at duration, inflows over the past week have been concentrated in the short-end and the belly part of the curve. Short-term IG funds recorded their seventh week of inflows. It was the second week of inflows for mid-term funds. On the other side, long-term funds recorded their third consecutive week of outflows” says BofA Merrill Lynch Global Research report.