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FX.co ★ Investors pull $14.5 billion from US equity funds

Investors pull $14.5 billion from US equity funds

Investors pull $14.5 billion from US equity funds

According to Bank of America Merrill Lynch, at least $14.5 billion was pulled from US equity funds in the week ended April 5. That was the largest outflow for 82 weeks.

Following Donald Trump’s victory, investors piled into US stock markets in a hope that his pledges to cut taxes and increase infrastructure spending will boost growth and inflation.

The S&P 500 hit record highs in the first quarter of 2017, but declined significantly after Trump failed to push his healthcare reform bill through Congress.

On March 24, House Republican leaders pulled legislation to repeal the bill from consideration as it did not even draw support among a majority of Republicans. It cast doubts about the rest plans that Trump had promised to fulfill.

BAML data showed outflows from US equity funds persist for a third week in a row. Meanwhile, Europe, Japan and emerging market equities had net inflows of $2.4 billion.

Emerging market equities rose by 12.8% in dollar terms so far this year. Indian, Mexican and Korean stocks were up more than 16% in dollar terms. In the meantime, US equities advanced by just 5.8%. The outflows were partly offset by inflows in other equities, which totaled $4.7 billion, the highest level over the past 40 weeks.

Bond funds performed much better, attracting $12.4 billion overall and hitting an 8-week high. Investment grade bond funds saw inflows of $6.7 billion, the largest in 8 weeks. High-yield bond funds raised $3.1 billion, the first inflows over the past five weeks. Emerging market debt funds also attracted investors’ interest, with inflows of $2.2 billion.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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