US funds benefit from investors’ euro fears

Investors are continued to look beyond the crisis-hit eurozone and towards the more favourable picture emerging in the US, according to the latest fund flows.

Figures published by fund flow data provider EPFR Global suggests that investors made “modest nods to the warming trend evident in US macroeconomic data” during the week ending December 7.

US equity funds tracked by EPFR Global recorded inflows for the seventh week in the last nine, while net money going to US municipal bond funds hit a 65-week high and inflows to US high-yield bond funds topped $2 billion (£1.3 billion).

In contrast, European equity funds continued to see money flow away. The cumulative outflows since the start of the third quarter has reached 1.05% of assets under management, compared with the loss of just 0.12% in US equity funds.

During the week to December 7, European bond funds were also hit with more than $1.3 billion in redemptions.

However, financial sector funds witnessed back-to-back weekly net gains for the first time since late May, while gold and precious metal funds experienced their first outflows for nine weeks.

Brad Durham, the managing director of EPFR Global, says: “The latest flows suggest that investors weren’t exactly expecting eurozone policymakers would have fixed everything by the weekend.

“But they are showing more faith in the resilience of the US economy relative to Europe and the flows into financial sector funds indicate some faith in the direction of policy on both sides of the Atlantic.”

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