(Adds more flows data)
LONDON Oct 14 European equity funds extended
their record stretch of outflows, with money that has left the
asset class over the previous 36 weeks now approaching $100
billion, while the relatively high returns on offer in emerging
market funds continued to attract investment, Bank of America
Merrill Lynch said on Friday.
Bond funds posted yet another weekly inflow, but BAML's data
showed that investors are gradually shifting out of longer-term
bonds towards shorter-term bonds, a move reflected in the recent
spike in longer-dated yields to the highest in months.
European equities have fallen out of favour among foreign
investors this year as sluggish earnings growth, an uncertain
economic outlook on the back of Britain's vote to leave the
European Union and worries over the profitability of the
region's banks have soured the mood.
Investors pulled $1.1 billion from European equity funds in
the week to Oct. 12, BAML said, citing EPFR Global data, marking
the 36th straight week of outflows and a stark contrast to
emerging market equity funds.
Investors poured $2.5 billion into these funds, the most in
two months and the 14th weekly inflow of the past 15 weeks. The
$900 million inflow into EM debt funds - the 15th in a row -
brought combined inflows into EM equity and debt funds over the
past three months up to $52 billion.
Bond funds drew a $2.6 billion net inflow in the latest
week, but a shift within that headline figure was underway.
'Long-duration' bond funds saw redemptions for the seventh
straight week, and investors' reference for 'short-duration'
bonds over long bonds was its strongest in two years.
BAML said this was a "clear reflection" of growing investor
worries about a possible U.S. interest rate hike soon, the Bank
of Japan announcing changes to its policy recently and
speculation that the European Central Bank might tweak its
policy soon too.
Overall, global investor sentiment is neither too bearish
nor too bullish - or in "goldilocks" territory - BAML said, as
fund flows continue to show a preference for bonds and emerging
(Reporting by Vikram Subhedar and Jamie McGeever; Editing by