Investors cut their exposure to Europe and emerging Asian markets during the second quarter of 2012. But where did they put their money?
Select groups of bond funds, sector funds and Japan-focused investments picked up much of the global inflows, according to EPFR Global, a Boston-based research firm.
During the quarter, U.S. and global bond funds were the only major geographical fund groups to absorb over $10 billion, EPFR Global says in data it released for the quarter.
U.S. money-market funds, for instance, had outflows of $28.5 billion during the March-June period vs. U.S. bond funds, which attracted $57.1 billion.
“It’s possible that in an environment where yields on some short-term U.S. and German debt are negative that investors are opting to hold more physical cash,” said EPFR Global research director Cameron Brandt, in a statement.
For the first half of 2012, flows into U.S. bond funds were $129.7 billion – way ahead of the $35.4 billion that went into this category in the first half of 2011.
Overall, global funds into bonds worldwide were $75.4 billion in Q2 and $197.3 billion in the first half of ’12, a big jump from $98.5 billion for the first half of ’11.
Equity Fund Flows
Equity funds are seeing some support from institutional investors and spotty inflows from retail investors, the group says. Retail investors were net contributors to this fund category in only two of the past 61 weeks. In contrast, bond funds experienced retail contributions in 25 of the last 26 weeks.