“ETFs certainly provide investors with the quickest way to tap into the latest bounce in global equity markets,” said EPFR Global research director Cameron Brandt, in a statement. “But, given the timing, some of the money may be looking to benefit from the quarterly rebalancing of many funds at the end of this month.”
The bond categories with the strongest flows last week were high yield, emerging markets, municipal and mortgage-backed bond funds, the Boston-based research group says. They were again to the fore as “the U.S. and Japanese central banks reaffirmed their commitment to ultra-low interest rates,” according to the group’s latest report.
“Flows have been quite volatile in recent weeks, reflecting the tension between an improving outlook for export plays and the Bank of Japan’s asset buying program on the one hand and the lack of credible political leadership on the other,” Brandt explained.
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Mortgage-backed bond funds have taken in fresh money every week for over a year. Meanwhile, year-to-date flows into high-yield bond funds are nearing the $24 billion mark. Emerging-market bond funds posted two of their four biggest weekly inflows since the beginning of February.
Europe and EMEA — Europe, Middle East and Africa — bond funds snapped outflow streaks of three and 10 weeks “on the heels of the ECB’s latest intervention,” said EPFR Global, as global bond funds experienced inflows for the 12th week in a row.
U.S. bond flows remain concentrated in municipal, mortgage-backed, corporate high-yield and intermediate-term debt, which accounted for more than 70% of the previous week’s inflows. Flows into the high-yield and municipal categories, though, are slowing from February levels.
Emerging bond funds were the fourth best on record, “reflecting their position as the best performing pure fixed-income fund group year to date,” ahead of high-yield, says EPFR Global. Their performance, however, still lags that of balanced funds (invested in both fixed-income assets and equities), which have a 7.8% gain for 2012 through mid-March.