Fund Flow Insights_ Inflows Return to DM Equity Funds

Summary of Fund Flow Insights - February 21, 2025 Industry Overview - The report focuses on the equity fund flows in both Developed Markets (DM) and Emerging Markets (EM), highlighting trends in inflows and outflows across various regions and fund types. Key Points Developed Markets (DM) - Equity Fund Inflows: DM equity funds experienced inflows of US$16.8 billion during the week ending February 19, 2025, with US ETFs contributing US$12.9 billion to unit creation [1][5][29]. - Bond Fund Inflows: Bond funds saw inflows of US$16.2 billion during the same period [1]. - Performance: The MSCI AC World index rose by 1.5%, indicating positive performance across most funds [1]. Emerging Markets (EM) - Equity Fund Outflows: EM funds faced outflows of US$5.3 billion, with China ETFs alone accounting for US$4.7 billion in redemptions despite a 5% rally in the MSCI China index [2][5]. - GEM Funds: GEM funds reported almost net zero flows, as inflows into ETFs were offset by redemptions from non-ETFs [2]. - Regional Insights: - India experienced US$1.6 billion in Foreign Institutional Investor (FII) outflows, while Taiwan saw US$0.2 billion in foreign inflows [2]. - Foreign flows in Korea remained weak, with nearly net zero flows [2]. Geographic Focus of Fund Flows - North America: Inflows of US$12.5 billion were noted, with a performance increase of 1.4% [3]. - Western Europe: Inflows totaled US$4.0 billion, with a performance increase of 0.5% [3]. - Asia Pacific: Japan saw negligible inflows, while other regions like EM Asia experienced significant outflows of US$5.5 billion [3]. Fund Type Analysis - ETFs vs Non-ETFs: The report indicates a trend where ETFs are attracting more inflows compared to non-ETFs, particularly in the US and Global markets [5][29]. - Cumulative Flows: The cumulative flows to equity funds versus bond funds were analyzed, showing a significant divergence in investor preferences [9][10]. Additional Insights - Market Allocation: The report emphasizes that market equity flows are estimated by multiplying fund flows into a fund group with the group's market allocation, providing a clearer picture of market dynamics [5][45]. - ESG Funds: The report also touches on flows to ESG funds, indicating a growing interest in sustainable investment options [112][120]. Conclusion The fund flow insights for the week ending February 19, 2025, reveal a robust recovery in developed markets, particularly in equity funds, while emerging markets continue to face challenges with significant outflows. The preference for ETFs over traditional funds is evident, reflecting changing investor behavior in the current market landscape.