HONG KONG, June 25 (Reuters) – China’s latest yuan policy shift triggered big flows into emerging market assets, but the risk of a second half global slowdown also caused investors to keep more cash, EPFR Global said in a report on Friday.
Of all the funds tracked by the firm, equity funds posted net outflows of $2.5 billion and bond funds took in $2.6 billion for the week ended June 23.
With only one week left in the first half, equity funds have posted inflows of $8.8 billion so far in 2010, compared with outflows of $26 billion for the same period in 2009.
Bond funds have absorbed more than three times as much as they did in the first 25 weeks of last year.
U.S. bond funds broke a 17-month string of inflows, with money instead headed to global and emerging market bond funds.
However, the week could not easily be characterised as a wholesale shift to risky assets, with money market funds absorbing $10.6 billion in fresh money .
During the period covered by EPFR’s latest data, the MSCI world equities index .MIWD00000PUS slipped 1 percent, the euro EUR= edged up 0.6 percent and the benchmark 10-year U.S. Treasury yield US10YT=RR slid 15 basis points.
EMERGING MARKET EQUITY FUNDS
The fund group absorbed $1.6 billion in the week, based on the view China’s de-pegging of the yuan opened opportunities for other emerging market exporters to gain market share.
China equity funds only took in $52 million for the week.
On the other hand, BRIC funds had best week of inflows since early March. Year-to-date inflows have risen to $772 million, less than half of the $1.75 billion taken in over the corresponding period last year.
Asia ex-Japan equity funds and Europe, Middle East & Africa funds had their second and third consecutive week of inflows, respectively.
DEVELOPED MARKET EQUITY FUNDS
Four of the five of the developed equity funds tracked by EPFR Global posted outflows in the latest week. Only Japan equity funds had inflows.
The global equity funds group, which has more than a third on average dedicated to Europe, suffered net redemptions of $976 million in the latest week.
Only four of the nine sector funds tracked by EPFR posted inflows and, of those four, only the utilities sector took in more than $70 million.
Commodity sector funds had outflows for the second time in 14 weeks.
This fund group reflected a greater appetite for risk more so than equity funds.
High yield and emerging market bond funds saw $1.1 billion and $637 million, respectively, in new money. That was the best week of inflows for high yield since early March.
Global bond funds had net inflows of more than $1 billion for the first time since the first week of May. (Reporting by Kevin Plumberg; Editing by Kazunori Takada)