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Investment grade bond funds suck in record US$12.3b as investors ditch stocks: BAML

London

INVESTORS ploughed a record US$12.3 billion into investment grade bond funds and ditched equities over the past week, Bank of America Merrill Lynch said on Friday, as worries over trade tensions and the world economy reinforced a run for safe-haven bets.

Bond funds overall pulled in US$17.5 billion in the week to Wednesday, their second biggest week of inflows on record, the bank said citing EPFR data. Bond funds have attracted US$183 billion since the start of 2019.

An "investor capitulation into government bond funds" saw sovereign securities draw in their second largest inflows ever at US$8.9 billion, BAML said.

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Meanwhile, equity funds suffered US$10.3 billion of outflows with year-to-date outflows amounting to US$155 billion. Across sectors, tech-oriented equity funds lost US$1.1 billion, their biggest weekly outflows this year, while funds focused on defensive stocks such as consumer, real estate and utilities all enjoyed inflows.

The wider risk-off mood also weighed on emerging market assets which suffered outflows of US$2.1 billion on the equity side, in a seventh straight week of losses, and lost US$700 million on the debt side, BAML found.

The bank's "Bull & Bear" gauge has fallen to 2.5, indicating that cross-asset positioning is bearish, it added. REUTERS