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Corporate bonds suddenly return to favour

Some €4.8bn was invested in investment grade corporate bonds funds in June alone, the highest monthly sum since our database records began in three years ago. Inflows were more than 10 times higher than in May, and are likely an investor reaction to the ECB’s interest rate cut in June, though government bonds continued to register outflows.

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At the same time, net inflows into high yield bond funds came to a sudden halt in June. While they had already been coming down since April, they were still close to €2bn in May. The Barclays Global High Yield Index indeed lost some ground in June, before rebounding strongly during the past two weeks.

EMD inflows sustained

The investment grade bond inflows went at the expense of those into high yield bond funds. Inflows into high yield have decreased steadily from close to €5bn in March to €16mln in June. In the shadow of the spectacular resurgence of corporate bond flows, emerging market bond funds continued to register sizeable inflows as well. The asset class saw combined second quarter inflows of €15bn.

EM stocks take the crown

On the equity side, emerging markets equity funds recorded the highest monthly inflows, passing the €2bn mark for the first time since January 2013. Inflows into the category were higher than those into European equities for the second consecutive month, while US equities recorded net outflows of €1.5bn.  

The data for the EIE Historic Fund Flows Database are provided by Morningstar.

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