Mini rotation

April 24, 2013

Well, I think we’ve successfully put to bed the idea that there’s any structural shift from bonds to equities going on (see here, here and here). Maybe time to look a little more closely at the numbers to pull out some more discrete swings in allocations.

We’ve just published the latest data on mutual fund and ETF flows from Lipper and there are, as ever, some clues. The snapshot of our interactive graphic below shows flows into and out of bond funds during March. You can click on the image to access the full graphic, or just click here.

One notable trend, and it represents a continuation from last month too, is the move away from corporate debt funds.

In fact, on a two month view, the 2,500 or so corporate debt funds and ETFs tracked by Lipper in four categories (EUR, USD, GBP and Global) show net outflows of $3.7 billion. That accounts for a little over 1 percent of the latest reported AUM at the funds in question. For euro-denominated corporate debt funds alone the rate is double that; sterling-denominated funds sit in between the two.

Talk to some of the players involved and they’re adamant there is no structural shift away from the sector. One source at a major fund firm said redemption rates – the rate of attrition expected as a rule – were steady or even marginally improved. What had happened was a switch by investors to push their ‘marginal’ money into equities instead of corporate debt. Two months’ data don’t make a trend, but we could label it a ‘mini rotation’.

Some other nuggets from among the data include a clear swing away from emerging market equities during March, with EM categories accounting for 10 of the top 25 for net outflows during the month.



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