The global bull market for equities may be growing long in the tooth, but investors have not lost their appetite for stocks just yet. A Citi Research report released yesterday quoted data from EPFR showing that global inflows to equity funds grew by $113 billion or 1.1% in October. This was the largest monthly inflow into equity funds in 2013, topping the $63 billion that flowed in during January of this year. It should also be noted that October was the first month of inflows since May for global bond funds ($3 billion or 0.1%)
European and Japanese funds showing greatest increases
European equity funds are experiencing the greatest inflows. Over $14 billion moved into Euro-area equity funds in October, an increase of over 1.1%. The report also showed that inflows to European and Japanese equity funds had increased significantly so far in 2H 2013, increasing by 4.4% and 5.5% respectively. U.S. equity funds saw inflows of $78 billion so far in 2H 2013, representing around 1.5% growth. Despite the positive inflows into developing market bond funds in October, they have experienced around 1.5% outflows so far in 2H 2013.
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Emerging market funds continue to see outflows
As Figure 1 illustrates, 2H 2013 is an abrupt reversal of the strong inflows into emerging market equity funds seen in 2H 2012. More than $11 billion has flowed out of EM equity funds since July, representing somewhere around a 1.2% decrease. EM bonds funds saw new capital flow in at a rate of almost 13% in 2H 2012, but the bottom dropped out from there, with EM bond funds suffering around 7.5% outflows since July.