DM bond funds see inflows; EM bond funds see outflows

Fund flow data for the week ended 3 June showed that developed market (DM) bond funds witnessed inflows despite continued US treasury (UST) volatility. 

Inflows went mainly to intermediate-term and total return funds. High-yield (HY) funds also received small inflows this past week. US-dedicated funds and European HY funds saw small inflows; however, global HY funds (including Asia-dedicated funds) witnessed small outflows. 

Emerging market (EM) bond funds saw bigger outflows when compared to the previous week. EM hard-currency (HC) bond funds as well as EM local-currency funds saw outflows this past week, mainly from global EM funds. 

Inflows to DM (including HY funds) and EM bond funds were institutionally driven; retail investors continued to reduce exposure to the asset class. Equity funds saw modest inflows this past week. Inflows to EM equity funds reduced. 

Asia ex-Japan inflows were positive, with flows going mainly to China- and Indiadomiciled funds, while Korea-domiciled funds saw outflows. DM equity funds saw small inflows, split evenly between US, European and global equity funds. 

"UST volatility continues to impact both our risk indicators. Our EM momentum indicator, which uses the 18-day moving average of the JPMorgan EMBIG Diversified Index, remains in 'short' territory today as higher UST yields led to a dip in the EMBIG total returns index.Our EM HC fund beta metric remains below 1, highlighting that the funds we track remain cautious, guarding against UST volatility and the situation in Greece",says Standard Chartered.