Global investors are still piling into Europe, weeks after the election of “bigger Europe” French president Emmanuel Macron. According to fund flow data from EPFR Global for the week ending May 17, Europe has once again driven global fund flows in the developed world.
Fresh money to Europe equity funds for the eighth week running steered another $3.8 billion to global stock funds, they said. At the single country and asset class fund level, flows into France and Norway bond funds hit 40 and 72-week highs respectively.
The iShares MSCI France (EWQ 41,41 -0,19 -0,46%) is down 1.66%, however, over the last five trading days, underperforming the Vanguard FTSE Europe (VGK 66,41 +0,11 +0,17%) fund and likely signaling and end to the French affair in the markets for the time being.
The iShares MSCI Norway (ENOR 23,49 -0,13 -0,54%) has gone in the opposite direction, with the equity ETF up 1.15%. There is no ETF for U.S. investors who want Norwegian currency bonds, but the Norwegian Krone has gone from 8.63 to 8.47 to the dollar, a bit stronger over the last five trading days as investors buy local debt.
European sentiment continues to improve thanks to Macron. But, while investors buy into Europe’s overall recovery story and the perceived ebbing of populism, they are definitely taking profits in Germany (EWG 31,75 -0,12 -0,38%), France, Spain (EWP 32,17 -0,19 -0,59%), Switzerland (EWL 47,60 +0,22 +0,46%), Italy (EWI 37,65 -0,07 -0,19%) and the UK (Unfortunately, we could not get stock quote UKX this time.). All of them recorded net outflows for the week.
Despite the recent flows to Europe, EPFR models that assign overweights and underweights by region based on the scoring of flows into relevant equity fund groups suggests that rotating exposure from the U.S. to emerging markets instead of Europe offers better returns than “jumping on the European bandwagon,“ EPFR analysts wrote in a note. Money Heads To EU, But Sell Off Begins
Global investors are still piling into Europe, weeks after the election of “bigger Europe” French president Emmanuel Macron. According to fund flow data from EPFR Global for the week ending May 17, Europe has once again driven global fund flows in the developed world.
Fresh money to Europe equity funds for the eighth week running steered another $3.8 billion to global stock funds, they said. At the single country and asset class fund level, flows into France and Norway bond funds hit 40 and 72-week highs respectively.
The iShares MSCI France (EWQ 41,41 -0,19 -0,46%) is down 1.66%, however, over the last five trading days, underperforming the Vanguard FTSE Europe (VGK 66,41 +0,11 +0,17%) fund and likely signaling and end to the French affair in the markets for the time being.
The iShares MSCI Norway (ENOR 23,49 -0,13 -0,54%) has gone in the opposite direction, with the equity ETF up 1.15%. There is no ETF for U.S. investors who want Norwegian currency bonds, but the Norwegian Krone has gone from 8.63 to 8.47 to the dollar, a bit stronger over the last five trading days as investors buy local debt.
European sentiment continues to improve thanks to Macron. But, while investors buy into Europe’s overall recovery story and the perceived ebbing of populism, they are definitely taking profits in Germany (EWG 31,75 -0,12 -0,38%), France, Spain (EWP 32,17 -0,19 -0,59%), Switzerland (EWL 47,60 +0,22 +0,46%), Italy (EWI 37,65 -0,07 -0,19%) and the UK (Unfortunately, we could not get stock quote UKX this time.). All of them recorded net outflows for the week.
Despite the recent flows to Europe, EPFR models that assign overweights and underweights by region based on the scoring of flows into relevant equity fund groups suggests that rotating exposure from the U.S. to emerging markets instead of Europe offers better returns than “jumping on the European bandwagon,“ EPFR analysts wrote in a note.