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.

• Flows turned negative in the past two weeks. For the two weeks ended May 1, investors withdrew more than $9.5 billion from mutual funds overall, with equities experiencing the biggest outflows.

• While total bond funds saw inflows of more than $18 billion in the 14 days through May 1, equity mutual funds experienced around $25 billion in outflows. Domestic equities were among the least-liked assets, seeing outflows of around $13.5 billion. Taxable and investment grade bonds were the most favored asset classes with $15 billion and $11 billion pouring into the asset classes over the period.

• Global markets were shaken by the intensification of a trade war between the U.S. and China, as hopes of a trade agreement were dashed in recent weeks. U.S. President Donald Trump threatened to impose 25% levies on $200 billion worth of Chinese goods, prompting China to take retaliatory measures. China moved to slap tariffs on $60 billion worth of U.S. goods, ranging from liquefied natural gas to toothpaste, despite warnings from Trump that retaliation would make things worse.

• The Federal Reserve maintained its monetary policy unchanged at its latest meeting, in a widely expected move, with interest rates steady at 2.5%. Fed Chair Jerome Powell did not reveal much about his view on future interest rate hikes on the subsequent press conference, although he remained upbeat on the economy and cited several transitory factors that led to a rough patch.

• The U.K. central bank kept interest rates on hold, although Governor Mark Carney said on a press conference investors were underestimating how much interest rates could rise, hitting a more hawkish tone than his U.S. and European counterparts.

• The U.S. labor market is humming along nicely, with the latest report revealing 263,000 jobs were added in April compared to 181,000 expected by analysts. Meanwhile, the unemployment rate declined to 3.6% from 3.8% in March.

• The U.K. economy grew 0.5% in the first quarter of 2019, in line with expectations. Brexit negotiations between Theresa May and the Labour Party are ongoing although not much headway has been made.

• U.K. manufacturing production rose for the third consecutive month, with April matching March’s rate of 0.9%. This is the best three-month streak since the beginning of 2017.

• U.S. inflation remained low in April rising from 1.9% to 2% compared with the same period last year. While economists had forecasted the consumer price index to rise 0.4% in April month-over-month, it advanced 0.3%. Core CPI was up 2.1% in the 12 months through April.

• Broad indices were all down with the exception of bonds, an asset class where investors found refuge after an escalation of the trade war between the U.S. and China.

• Vanguard’s total bond market fund (VBMFX) was the best performer with a tepid rise of 0.09%.

• Technology stocks fund (NASDX) was the poorest performer for the past two weeks, losing 2.9% of its value.

• Sectors were mostly down, although the performance has been quite disparate.

• Chemicals fund (FSCHX) declined more than 8% during the past two weeks through Friday, as the sector was hit by Bayer’s legal woes related to its acquisition of agrochemical company Monsanto.

• On the other side of the spectrum is the consumer staples fund (FDFAX), which advanced 0.78% in the past two weeks.

• Foreign equities were all down.

• Unsurprisingly, Chinese equities fund (MICDX) lost the most this week, down 4.11%, as the trade war rages on.

• European equities fund (VEURX) recorded the best performance for the past two weeks, falling just 1.9%.

• In asset classes, bonds were the best performers and the only assets that delivered gains.

• Pimco’s long-term bonds mutual fund (PEDIX) advanced 1.32%.

• At the same time, Vanguard’s large-cap index fund (VFINX) declined by 1.9%.

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Investors have stampeded for the exits as a trade dispute between the U.S. and China gathered steam. Equities experienced large outflows, offset by strong inflows in bond mutual funds. Performance-wise, bonds have been largely favored by investors, while equities were mostly down. Chinese stocks and chemicals equities, in particular, posted a thoroughly weak performance.

We provide this report on a fortnightly basis. To stay up to date with mutual fund market events, return to our News page here.