Fund flow data for the week ended 10 June showed that both developed-market (DM) and emerging-market (EM) bond funds witnessed outflows due to continued US treasury (UST) volatility. EM bond funds had a third week of outflows. EM hardcurrency (HC) bond funds and EM local-currency (LC) funds saw outflows this past week, mainly from global EM funds.
High-yield (HY) funds also saw outflows this past week. US-dedicated funds and global HY funds (including Asia-dedicated funds) witnessed significant outflows, while European HY funds saw small inflows, notes Standard Chartered. In a departure from previous weeks, both institutional and retail investors pulled money out of DM (including HY) and EM bond funds.
Equity funds also saw outflows this past week, mainly from EM equity funds. Chinadomiciled funds saw large outflows, with tactical investors pulling money out following MSCI's decision to postpone China's inclusion in its EM indices. DM equity funds saw small inflows, split evenly across US, European and global equity funds.
UST volatility continues to impact both the risk indicators. The EM momentum indicator, which uses the 18-day moving average of the JPMorgan EMBIG Diversified Index, remains in 'short' territory today as higher UST yields led to a dip in the EMBIG total returns index. The EM HC fund beta metric remains below 1, highlighting that the funds was tracked remain cautious, guarding against UST volatility and the situation in Greece, says Standard Chartered.
