Record global inflows into bond funds
Investors’ confidence in bonds remains solid. After several weeks of growth, $32.5bn flowed into bond funds from 29 May to 4 June, a record since the creation of Flow Show, BofA Global Research’s weekly report. Bonds took advantage of investors’ attraction for investment grade funds (+$20.8bn, an all-time high), and high yield funds (+$10.2bn, the second largest inflow, after April 2015). In contrast, government bond funds slowed their momentum, with $3.4bn in outflows.
Risk appetite has also shown up in equity funds, but positive inflows were mainly on US funds. Out of $6.2bn in net inflows, $5.9bn went into US equity funds. European funds drew in a net $0.6bn, while Japanese and emerging market equity funds saw, respectively $1.2bn and $3.1bn in net outflows. Within US equity funds, large cap vehicles accounted for $3.6bn in inflows. Almost all economic sectors achieved net inflows, led by tech (+$2.2bn).
In contrast, with their near-zero yields, money-market funds, which had amassed a gigantic amount of more than $1trn in AuM during the Covid-19 crisis, no longer interest global investors. On the week, they pulled out $16.7bn, for their first major outflow in four months. Gold funds, meanwhile (+€2.1bn), continued their inexorable climb, with almost a half-year of uninterrupted positive inflows.