A Look at Fund Flows for Q1 2016

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A Look at Fund Flows for Q1 2016

Justin Kuepper Apr 14, 2016

Mutual Fund Flows Morningstar

Bonds Bounce Back & Forth

The Federal Reserve’s dovish outlook this year has changed sentiments. By February, taxable bonds saw a $12.9 billion influx of capital as investors bet that the central bank would cool off its plans to hike interest rates throughout the year. Intermediate bonds, high-yield bonds, and corporate bonds all reported strong inflows, although investors continue to stick with municipal bonds as a tax-free way to improve their income.

Direct Asset Flows Morningstar

Investors Look Passive & Global

International equities have seen significant inflows amounting to $4.1 billion by February as investors poured money into foreign large-cap growth and – to a lesser extent – diversified emerging-market funds. With the lower U.S. dollar and high U.S. equity valuations, investors were likely hoping to see these markets outperform with better value opportunities, but these trends could be shifting moving into the latter part of the year.

Looking into the second quarter, emerging-market performance has started to recover as China’s economy has shown signs of improvement. These dynamics could lead to a shift of capital into emerging markets. At the same time, the ongoing slowdown in Japan and other developed markets could lead to a slowdown in global funds focused on those markets, although they may still represent a better value than lofty U.S. equities.

Commodities & Alternatives Gain Steam

Gold Inflows Chart Morningstar

The Bottom Line

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