Investors pull $7.4
billion from stocks funds, largest outflow in 12 weeks:
BAML
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[September 23, 2016]
By Claire Milhench
LONDON (Reuters) - Global investors
pulled $7.4 billion from equity funds in the week to Wednesday, the
largest outflow in around three months, as uncertainty over U.S. and
Japanese monetary policy unnerved stocks, Bank of America Merrill
Lynch (BAML) said on Friday.
A spike higher in longer-dated bond yields had caused yield curves
in the United States, Japan and Germany to steepen over the past two
weeks, prompting the redemptions from European, U.S. and emerging
markets stocks funds.
Although there was little expectation that the U.S. Federal Reserve
would raise rates at its Sept. 20-21 meeting, investors erred on the
side of caution and parked $15.6 billion in money market funds in
the run up to the Fed decision.
Investors were also wary ahead of the Bank of Japan's Sept. 21
meeting at which it made an abrupt shift in policy, saying it would
buy government bonds when necessary to keep 10-year yields at their
current levels of around zero percent.
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The BOJ reassured markets that it would continue to buy riskier
assets, but some analysts suggested it had overhauled its stimulus
policy so it would be easier to exit in future.
"BoJ and Fed 'taper-tantrum' fears may have sparked redemptions in
emerging market equity funds and in high yield bond funds," BAML
analysts wrote in a note.
A steeper U.S. yield curve strengthens the appeal of risk-free bonds
such as U.S. Treasuries over lower quality assets in emerging
markets.
Emerging market equities saw their first outflows in 12 weeks,
albeit a small $100 million, whilst some $1.2 billion was redeemed
from high yield bond funds.
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![](../images/092316pics/busine16.jpg)
An investor checks stock information on her mobile phone at a
brokerage house in Beijing, China, June 24, 2016. REUTERS/Jason
Lee/File Photo
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U.S. equity funds lost $7.7 billion, their largest outflows in 12
weeks, whilst European equity funds lost $1.8 billion in a record
33rd straight week of redemptions.
"Europe continues to be the 'vacant' trade (with) no interest since
the February 2016 market lows," BAML said. European stocks <.FTEU3>
have fallen 5.3 percent so far this year.
Japanese equities bucked the trend, attracting $2.4 billion. The
Nikkei <.N225> was up around 7.6 percent in the third quarter, but
is still down almost 12 percent so far this year.
Overall, bond funds attracted some $3.8 billion, with emerging
market debt funds pulling in $1.5 billion in their 12th straight
week of inflows. Investment grade bonds attracted some $2.8 billion.
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