Every fortnight, MutualFunds.com provides a snapshot of the performance of some key mutual funds which tries to accurately capture the investor interest in specific areas of the financial markets. The report is aimed at providing a quick overview of the sectors, regions and asset classes that moved in a meaningful manner during the last two weeks.
- Investors have been taking money out of equity and hybrid mutual funds and plowing them into bond funds. While equity funds had estimated outflows of $3.44 billion for the week ended August 22, bond funds saw inflows of $1.64 billion. A large part of the inflows went into taxable bonds – $1.23 billion. Municipal bonds had estimated inflows of $417 million.
- The flow picture has not changed dramatically compared to the previous week, when bonds saw inflows of $1.87 billion and equity funds had outflows of $2.26 billion.
- Money has been flowing out of equity and hybrid mutual funds into bond funds for at least the past eight weeks. Taxable bonds and government bonds were the most liked categories, receiving most inflows over the past two months.
- Federal Reserve Chair Jerome Powell has indicated that the current path of interest rate hikes is the right approach amid rising voices that the U.S. central bank is behind the curve and may be caught wrong-footed. Were the inflation to spiral out of control, Powell said the Fed would do “whatever it takes” to head it off.
- U.S. President Donald Trump is ready to launch another round of tariffs on Chinese goods as soon as a period for public comments on the initiative ends. Currently, around $50 billion of China’s imports are subject to levies. The U.S. government may target another $200 billion, raising the stakes in a trade dispute that threatens to derail global economic growth.
- We provide this report on a fortnightly basis. To stay up to date with mutual fund market events, come back to our news page here.
In the U.S., technology and small-cap stocks were the most favored equities lately, thanks to a strong economy and growth prospects. At the same time, the U.S. and Japan provided relative safety to investors, as other regions, such as emerging markets and Europe, have been suffering from increasing trade tensions.
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