Equity funds attracted the highest weekly inflows worldwide since late in the second quarter of 2008 after the Federal Reserve spelled out plans to support the U.S. economy, according to EPFR Global.
Investors committed more than $15 billion to equity funds tracked by EPFR in the week ended Nov. 10, it said in an e-mail dated Nov. 12. Commodity-sector funds hit a 26-week high, while flows into Greater China hit their highest since late 2007. Emerging market inflows of $79.9 billion this year are set to exceed 2009’s record $83.3 billion.
“The fund flow taps opened after the U.S. Federal Reserve spelled out its goals for a new round of quantitative easing -- the so-called QE2 -- on Nov. 4,” EPFR said.
Stocks slid Friday, extending the biggest weekly slump in three months for U.S. benchmark indexes, and commodities tumbled amid speculation China will lift interest rates. The Standard & Poor’s 500 Index fell 2.2 percent over the past five days, its biggest drop since the second week of August. A week ago, it rallied to a two-year high amid improving earnings and a Federal Reserve plan to pump $600 billion into the economy through purchases of Treasuries.
China may increase rates within weeks after inflation accelerated to the fastest pace in 25 months in October, according to a Bloomberg survey.
Group of 20 leaders agreed to develop indicators to head off economic turmoil, while officials from Europe’s largest economies said outstanding debt will be exempt from a crisis-resolution mechanism that may force bondholders to share costs of bailouts.
‘Macro Items Dominate’
“The market wants to go up, but I worry about one thing and that’s a dominance of the macro picture coming to the forefront,” said Keith Wirtz, who oversees $18 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. “The market’s largely through the earnings season, so we’re moving into that quiet stage. We may be moving back into that environment where the macro items dominate.”
The Shanghai Composite Index sank 5.2 percent Friday, the most since August 2009. The Thomson Reuters/ Jefferies CRB commodities index fell the most in 18 months as oil and copper lost more than 3 percent.
Flows into bond funds tracked by EPFR were positive for the 24th consecutive week in early November as collective year-to- date flows surpassed $365 billion. EPFR tracks $13 trillion of assets globally.
“With U.S. policy makers opening the liquidity taps even further, investors focused their attention -- and money -- on emerging markets and other higher yielding debt,” EPFR said.
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