Investors Hunker in Money-Market Funds to Flee Confusing Markets
(Bloomberg) -- Investors are showing increasing signs of risk-aversion at the start of August, a historically difficult month for asset allocations, highlighting uncertainty about inflation and the delta variant of Covid-19.
Flows data showed that over half the $44 billion taken in by EPFR-tracked fund groups in the week through Aug. 4 went into money-market cohorts. Equity funds, which have seen net inflows every week this year, registered the fourth-smallest intake year-to-date, according to the financial-data firm. Inflation-protected bond funds recorded their 37th straight inflow, while gold-related cohorts had their biggest takings in about two months.
“Investors are treading cautiously -- if at all -- in early August,” EPFR’s report said. “What to make of a market where the response to fears of slowing global growth is a string of record highs in equity markets on both sides of the Atlantic? How best to position yourself when inflation in the U.S. is, by some measures, at a 30-year high but the stock of global debt with negative interest rates recently hit a seven-month high?”
Signs of hesitation have emerged heading into August and September, months that tended, in recent decades, to have elevated volatility for equities. Risk-avoidance also arrived as the delta variant of Covid wreaks havoc with reopening investment playbooks and amid concern that inflation could become difficult for central banks to combat.
At the same time, many strategists see further gains for stocks as those hit hard by Covid recover amid reopenings.
Faced with these contradictory signals, the report said, “many investors opted to take a step back.”
EPFR, a subsidiary of Informa Plc, tracks flows and asset-allocation data on over 134,250 traditional and alternative funds globally, according to the report.
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