Macroeconomic data from the world’s largest economy last week showed worrying signs its recovery may be faltering. Unemployment data, despite showing a fall in the number jobless by 31,000, and housing data, both reported last week, has continued to be weak and it is expected the country’s second quarter GDP figures will be revised down to around 1.3% today from the 2.4% advance estimate released in July.
This backdrop has made investors nervous and a total of $7.13bn was redeemed from EPFR Global-tracked equity funds in the week ending 25 August, while $5.15bn was steered into bond funds and fresh cash committed to money market funds for the fourth time in the past five weeks.
US equity funds saw the biggest redemptions in dollar terms, with a total of $5.4bn leaving during the week, while Japan equity funds lost $289m – the most in terms of a percentage of assets under management.
Flows into other equity sectors also suffered a slowdown as investor’s confidence in markets was dented. Global emerging market equity funds, while managing to extend their inflow streak to 13 consecutive weeks in late August, saw inflows of only $322m – the lowest weekly total during that run. Other flows were as equally subdued, with Latin American equity funds and EMEA equity funds taking in less than $40m each.
Fears of a continued slowdown in the US’ recovery and concerns about the Japanese economy have had a knock-on effect on Europe this year as investors shun the largely export-driven region. So far $15.7bn has been redeemed from the region’s equity funds.
