April 5 Investors poured a net $4.89 billion
into U.S. and global bond funds in the week ended Wednesday, the
highest level in over two months, reflecting the appetite for
higher-yielding assets in a persistently low-interest-rate
environment, EPFR Global data showed on Friday.
Emerging markets, high-yield "junk" and floating-rate bond
funds each took in over $850 million for the week, while U.S.
bond funds attracted $2 billion, EPFR said. Even municipal bond
funds eked out modest inflows despite Stockton, California's
progress toward bankruptcy, the firm noted.
"Investors showed some willingness to take on more risk in
pursuit of yield" despite geopolitical and macro risks,
including the North Korean threats and unorthodox policymaking
in Japan and Eastern Europe, said Cameron Brandt, director of
research at EPFR.
Despite talk of a large-scale investment shift market that
many have called "the great rotation" -- a tilting of pension
and insurance funds' long-term asset mix back toward equities
and away from a heavy weighting in bonds -- investors have been
putting cash to work in both bond and equity funds.
So far this year, U.S. funds that invest in stocks have
gained $78.88 billion and taxable bond mutual funds have gained
$76.41 billion, according to data from Thomson Reuters' Lipper
Brandt said retail cash came into U.S. equity funds over the
last week "as those investors, who were absent for much of
February and March, committed money for the second straight
Emerging markets equity funds tracked by EPFR Global also
posted inflows, the first time since the first week of March,
despite weak employment data from the United States and Europe,
North Korea's brinkmanship and fresh evidence of Japan's
determination to improve the competitiveness of its currency.
Latin America, Asia ex-Japan and the diversified global
emerging markets equity funds all took in fresh money during a
week, while emerging markets dividend funds extended an inflow
streak stretching back to the late second quarter of 2012.
So far this year, more than $1.4 billion has flowed out of
Brazil equity funds while Mexico equity funds have taken in over
$1.2 billion. "Growth in the region's biggest economy is slowing
again while inflation is at a level that limits the central
bank's willingness to cut rates," Brandt said. "Mexico,
meanwhile, offers the prospect of higher growth and an ambitious