Last night Lipper announced fund flow data and the verdict is in. Investors are reaching for risk and after March the data shows dramatic improvement in market tone after pulling back in the first two months of the year. The data also indicates April’s fund flow has started out strong. 

Image courtesy Eugene Regis: we are in a good channel for equity performance but investors should review that stance in 3 weeks.

Emerging Markets were the star performer in last week’s data, not in aggregate flow terms but in terms of sentiment shift.

Emerging Market equities (EEM, quote) saw fund inflows for the first time in a record 22 weeks.

To recap fund inflows:

  • U.S. Funds Inflows +$5.4bn
  • Emerging Markets Funds Inflows +$2.5bn
  • Despite the rally that has already taken place.

Internationally, Europe received the largest inflows of any region but the levels were the lowest since June 2013 telling you how strong the inflow to Europe has been. 

On a side note to this story is that the strength in the Euro is very much a capital flow and asset allocation story. 

European Union Banks and large funds are bringing assets back to the continent and global investors continue to see higher spreads in Europe than in US and Japan. 

Today, Italian 10yr yields went to a record low but still European Union equities arguably have been the place to invest as rates go lower pushing up RFR in equity valuations

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