Investors gingerly wading back into markets
Investors are moving money away from cash and into emerging-markets equity funds and high-yield bond funds, according to Emerging Portfolio Fund Research Inc., a Cambridge, Mass. based research firm.
Investors are moving money away from cash and into emerging-markets equity funds and high-yield bond funds, according to Emerging Portfolio Fund Research Inc., a Cambridge, Mass. based research firm.
The firm, which tracks more than 20,000 funds worldwide, representing $10 trillion in total assets, found that money market funds shed $57 billion in the four weeks ending April 1.
The flows benefited asset classes such as emerging-market equity funds and high-yield bond funds, the firm reported.
Investors are moving back into the markets, said Brad Durham, managing director at the firm.
“The move out of money market funds means that investors now feel comfortable enough to move out of these so-called safe investments and into equity exposure,” he said.
“In the last several weeks, investors have been looking to take on a bit more risk.”
The outflow from money market funds has been consistent over the past four weeks, he said.
For the month ending April 1, emerging-markets equity funds took in $2.52 billion.
At the same time, high-yield bond funds took in $835 million.
“The intensity of the flows into high-yield bonds was stronger for this category than other bond funds,” Mr. Durham said.
A similar trend in outflows from money market mutual funds was reported in the United States.
Domestic money market mutual funds shed $69 billion in the three consecutive weeks ending April 2, according to the Washington-based Investment Company Institute.
“Certainly, people are feeling much better [about the markets] than they were a couple of months ago,” said Peter Crane, president of Crane Data LLC, a Westborough, Mass.-based research firm focused on the money market industry.
“There’s definitely a movement back into stocks and out on the risk curve. But some of the outflow from money funds is seasonal.”
Outflows from U.S. money funds in part may be attributed to the March 16 deadline for corporate tax payments, he said.
The money fund sector now totals $3.83 trillion in assets, the ICI reported.
Learn more about reprints and licensing for this article.
