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Gold funds post longest run of inflows since 2009: BAML

[LONDON] Gold funds accumulated their largest inflows since 2009 and equity funds posted their longest run of outflows since 2008 in the last week as financial market turmoil continued to unnerve investors, Bank of America Merrill Lynch said on Friday.

The US$2.6 billion poured into gold funds in the week to Feb 24 brought the rolling three-week total to $5.8 billion, the most since June 2009, the bank said in its weekly note. Gold is traditionally viewed as a safe haven from uncertainty. "Inflows have coincided with the Fed 'talking down' the US dollar and rising investor fears of recession," BAML's global investment strategy team, led by Michael Hartnett, said.

The International Monetary Fund said this week it is likely to cut its world growth forecast for this year in April, while economists at Citi lowered their 2016 global outlook to 2.5 per cent from 2.7 per cent.

Investors withdrew a net US$2.7 billion from equity funds, marking the eighth weekly redemption in a row, the longest outflow since 2008, BAML said.

Hartnett and his team noted that the meetings of G20 nation finance ministers and central bankers in Shanghai this weekend and looming monetary policy decisions in the United States, euro zone and Japan are keeping investors on edge. "Investors increasingly regard policy meetings as a selling catalyst not a buying catalyst, so selling pressure resumes if policy disappoints," they wrote.

In a world of increasingly negative bond yields and interest rates, there were some signs last week of investors reaching for yield. High yield bond funds attracted a net US$3.1 billion, the largest inflow in 16 weeks, BAML said.


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