Equity funds make global comeback: EPFR

NEW YORK Fri Mar 16, 2012 7:40pm EDT

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NEW YORK (Reuters) - Investors favored equity funds over bond funds in the latest week as the S&P 500 notched big gains, data from EPFR Global showed on Friday.

For the week ended March 14, U.S. equity funds had $9.05 billion in inflows, up from redemptions of $5.73 billion the previous week, EPFR reported. U.S. bond funds had inflows of $5.29 billion.

The S&P 500 rose 3.1 percent during the week, driven by solid jobs data, the strength of stress test results on most big U.S. banks, and a moderately improved economic outlook from the Federal Reserve.

Globally tracked bond funds managed to attract record inflows of $7.57 billion even with the robust inflows into U.S. equity funds, said Cameron Brandt, EPFR Global's research director.

Risk assets like high-yield funds and emerging market debt continued to post high inflows. Global high-yield funds had inflows of $884 million, down slightly from the previous week's $1.11 billion, while emerging market debt inflows were nearly unchanged at $1.43 billion.

Money market funds had redemptions of $4.5 billion for the week, compared with inflows of $5.92 billion the previous week.

"If the Fed comes out with the statement that the economy is improving, and they're going to continue to keep rates low, their intent is to get people out of money market funds...and into risk assets," said Jim Dunigan, chief investment officer of PNC Asset Management.

European equity funds had redemptions of $873 million, while European bond funds gained $90 million in inflows in a week when Greece took on the status of being in technical default.

BRIC, GEMs, and SECTOR-SPECIFIC FUNDS

Dedicated BRIC funds had outflows of $74 million. In equity-specific funds, Latin America led with inflows of $93 million, while China had redemptions of $62 million.

Asia ex-Japan equity funds had redemptions of $352 million.

"The impact of China's recent announcement lowering this year's full-year GDP target and its latest trade deficit figures were reflected in the first back-to-back weeks of outflows for Asia ex-Japan Equity Funds year-to-date," said EPFR Global's Brandt.

Global Emerging Markets (GEM) equity funds had inflows of $736 million, down from the previous week's inflows of $1.33 billion.

Among sector-specific funds, energy and financials led with inflows of $688 million and $622 million, respectively.

(Reporting by Sam Forgione; Editing by Leslie Adler)

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