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Bond funds post US$102b inflows in Q1, highest demand since 2001

[NEW YORK] Investors worldwide poured US$8.5 billion into fixed-income funds in the week ended April 1, marking the first three months of this year as the biggest first quarter for fixed-income inflows since 2001, data from a Bank of America Merrill Lynch Global Research report showed on Friday.

The first quarter posted net cash inflows of US$102 billion, according to the BofA report, which also cited data from fund-tracker EPFR Global. Investment-grade bond funds saw the majority of the net inflows in the latest week with US$5.3 billion.

European equity funds also had strong inflows at the end of the first quarter. Funds that specialize in European stocks attracted US$3.7 billion of net inflows in the week ended April 1, their 12th straight week of net inflows.

Funds that specialize in Japanese stocks also posted inflows in the latest week, with US$1.9 billion of net inflows, their sixth straight week, BofA said.

Bank of America's Michael Hartnett and Brian Leung, authors of the report, said the European Central Bank's 1 trillion-euro government bond-buying program is spurring surging demand for European equities.

"ECB Quantitative Easing-inspired inflows to European equities (are) now very similar as the percentage of asset under management to Japan equity inflows during the launch of the Bank of Japan's QE in 2013."

For their part, investors worldwide yanked US$14.9 billion from US-focused stock funds, the sixth net withdrawals within the past seven weeks, BofA added.

REUTERS