U.S. equity funds have biggest outflow since June 2008 – BofA

U.S. equity funds have biggest outflow since June 2008 – BofA

Fri, Aug 23 2013

NEW YORK, Aug 23 (Reuters) – Investors worldwide withdrew $14.3 billion from U.S. equity funds in the latest week, marking the biggest weekly outflow from the funds since June 2008, data from a Bank of America Merrill Lynch Global Research report showed Friday. Nearly all of the outflows from U.S. equity funds in the week ended Aug. 21 were from exchange-traded funds, the report said, also citing data from fund-tracker EPFR Global.Investors pulled $10 billion from the SPDR S&P 500 ETF Trust alone, which tracks the performance of the benchmark S&P 500 index, the report said.

The benchmark stock index dropped 2.53 percent over the weekly period as positive U.S. economic data reinforced fears that the Federal Reserve will soon scale back its $85 billion of monthly bond purchases.

U.S. stock markets fell over the week partly on hesitation leading up to Aug. 21, when the Federal Open Market Committee, the U.S. central bank’s policy-setting group, released the minutes of its July 30-31 meeting.

The minutes offered few clues on the timing of a reduction in the Fed’s bond-buying program, but also did not alter the eventuality of such a reduction in stimulus. [ID: nL2N0GM1EC]

Stock funds overall had $12.3 billion in outflows, marking the first outflows from the funds in eight weeks. Funds that hold European stocks attracted $1.6 billion in new cash, marking an eighth straight week of inflows.

The funds were popular even as the FTSEurofirst 300 index of top European shares fell 2.63 percent over the week.

Bond funds worldwide had outflows of $7.4 billion as yields on benchmark U.S. Treasuries reached two-year highs. Investors pulled $1.3 billion from emerging market bond funds, marking the biggest outflow from the funds in five weeks, according to Bank of America Merrill Lynch.

Rising interest rates in response to fears that the Fed will reduce its stimulus are hurting emerging markets, which have benefited from large cash inflows as a result of the Fed’s and other central banks’ easy money policies.

Money market funds, which are low-risk vehicles that invest in short-term securities, took in $22 billion in new cash over the weekly period. It was the third straight week that investors poured money into the funds.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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