Investors Thirst for Risk

Investors are rotating out of money market funds and into riskier assets, according to EPFR Global, which notes solid receipts for LatAm equity. Data through April 30 – which do not reflect the Brazil sovereign upgrade of that day – show flow of $336.6m into LatAm regional equity funds, taking assets under management (AUM) to $50.52bn. This compares to $804.5m receipts in the previous week. “Investors are getting more risk back in their portfolios,” says Brad Durham, an MD at EPFR Global. He highlights sustained interest in high yield bond funds, EM equity and US small cap stocks. “Strong flows into high yield are especially noteworthy, since the nearly $2bn of inflows into these funds over the past four weeks is the strongest since the first quarter of 2007,” adds Durham. Dedicated BRIC equity funds absorbed a net $462m, marking their best week this year. Brazil equity funds took in $56.6m, bringing AUM to $14.2bn. Global EM equity funds also had their best week since late Q4 2007. By contrast, investors withdrew $32.4bn from money market funds in the week leading up to the US Fed meeting April 30. Meanwhile, in fixed income, there were EM withdrawals in all but local currency bond funds.