Weekly Fund Flows:European equity funds surge

With France having chosen Macron over Le Pen last week, the inflow window forEurope once again opened and fund investors did not waste any time, committing$6 billion to European equity funds - the highest weekly flow in USD-terms sincedata started in 2000 and the highest since July 2015 when measured in % ofNAV (in order to adjust for the continuously expanding fund flow universe; seebottom left chart). European equity funds have now gathered $15 billion sincetheir trough at the end of last year, which still looks modest compared to $103billion of outflows in 2016. Similar to the week prior, Europe profited from sizeableUS equity fund redemptions, and, as highlighted in the past, inflows into USdomiciledEuropean equity funds have been a strong supporting factor, againscaling two-year high weekly inflows last week.

    While we expect fund investors to continue engaging with Europe for the nextcouple of months, we do so because European flows tend to lag the Europeanequity market performance by six months. And with the latter having risen sharplysince mid-2016, we see strong fund flows as an expression of past marketstrength. On a global fund flow level (total equity + total bonds) we expect flowmomentum to roll over from its four-year peak on the back of continued fade inglobal PMIs (see bottom right chart).