US funds dominate flows first week of 2022

The US Federal Reserve’s more hawkish tone and the derailing of the Biden administration’s Build Back Better spending package did not undermine investors faith in American stock market and the US funds saw one of the highest inflows.

According to Informa’s subsidiary EPFR, which tracked fund flows and asset allocation data, the US equity, bond and money market funds, which absorbed nearly US$360 billion ($499.3 billion) in 4Q21, had attracted over US$25 billion during the first week of the year to 5 January, 2022.

Since the start of the pandemic, the assets held by US money market funds increased by US$1.3 trillion and estimates of the ‘excess’ savings accumulated by American consumers ranged from US$2 trillion to US$3.5 trillion, the firm said.

At the same time, investors also appreciated diversified global exposure to both stocks and bonds as well as funds with socially responsible (SRI) and environmental, social and governance (ESG) mandates.

Additionally, institutional investors also added to their exposure to Chinese equity, with dedicated China equity Funds posting their fourth consecutive inflow and 20th in the past 26 weeks.

Overall, the first week of 2022 saw EPFR-tracked equity funds posted a collective inflow of US$25.6 billion, while alternative funds attracted US$378 million, balanced funds $4.1 billion – a 26-week high – and bond funds $6.8 billion. Of the $20.1 billion taken in by all money market funds, over a third went to funds dedicated to the US.

Source: EPFR

Looking at the single country and asset class fund levels, flows into Brazil bond funds climbed to six-month high, with Brazil equity funds having recorded their eighth inflow in the past 12 weeks, while Greek equity funds experienced their heaviest redemptions since late 1Q20.

Following this, Canada equity funds recorded their biggest outflow in 14 weeks while municipal, bank loan and inflation protected bond funds posted inflows for the 50th, 51st and 52nd time, respectively, since the beginning of last year while money flowed out of mortgage-backed bond funds for the seventh straight week.