Weekly Fund Flows:More of the muted same

7 August 2017Weekly Fund FlowsPeriodicalEuropeStrategyWeekly Fund FlowsDate7 August 2017Deutsche BankMarkets ResearchMore of the muted sameLast week’s (Wed-Wed) review of funds’ in/outflows as % of funds’ AuM.Fund flow momentum remained subdued last week as investors lookednoncommittal, moving into money market funds in sizeable proportions for thesecond week running but keeping changes for other asset classes to a minimum.Inflows into equity funds slowed to a six-week low, and while US equity indicesbroke into new all-time highs last week, a strong Q2 earnings season paired witha weaker dollar and supportive US economic data still failed to entice new inflowsfor US equity funds as they suffered the seventh straight week of redemptionsinstead.A strong showing of money market mandates is typically not associated withthe height of the post-earnings summer lull, but muted flows are, and with lastFriday’s payrolls arguably the last major event risk until Jackson Hole in twoweeks, we expect a further slowdown in bonds and equity flow momentum asthe global PMIs grind lower (Fig. 1). Similarly, with bond yields moderating afterwhat had been a surge post Draghi’s speech in Sintra in late June, the DM bond-to-equity rotation is also kept waiting for new catalysts for now (Fig. 2).Figure 1: Our projected fade in global PMIs point todownside for total flow momentum495051525354555657-1.7%-1.2%-0.7%-0.2%0.3%0.8%1.3%1.8%2.3%2.8%Jan-10Aug-11Jan-13Aug-14Feb-16Aug-17Total equity+ bond funds, 3m flows % of NAVGlobal composite PMI new orders, rhsDraghi: "Whatever it takes"Source: EPFR Global, Haver, Deutsche Bank calculationsFigure 2: Moderating yields should slow down bond-to-equity rotation-240-190-140-90-401060110160210-300-200-100010020030040020052008201120142017DM bond minus equity flows, in USDbnUS 10-year bond yield, in bps, inv., rhsy-o-y changeSource: EPFR Global, Datastream, Deutsche Bank calculationsAndreas BrucknerStrategist+44-20-754-18171Sebastian Raedler, PhDStrategist+44-20-754-18169Wolf von RotbergAnalyst+44-20-754-52801Tom Pearce, CFAStrategist+44-20-754-16568Deutsche Bank AG/LondonDeutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should beaware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should considerthis report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONSARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017.Distributed on: 07/08/2017 19:15:11 GMT0bed7b6cf11c 7 August 2017Weekly Fund FlowsBonds (+), equities (+) and MM (++): Total equity funds slowing down to a six-week low while total bond funds rising to a 2 week high. In more detail, total equityfunds (+0.0%, MFs:-0.1%, ETFs: +0.2%) gained marginally as eight-week high MFredemptions offset fresh ETF inflows. Total bond funds (+0.2%) saw inflows (forthe 30th time in the past 31 weeks) driven by both DM (+0.1%) and EM (+0.5%)bond mandates,but MM funds (+0.5%) take first place once more with secondhighest inflows year-to-date.Figure 3: Flow data on funds (allincluding ETFs)Total assets in EPFR sample ($bn)12m cum. flow as % of 4wk avg. flow as % of Total equity funds9,7472.50.1 Total Developed Market equity funds8,6582.30.1US equity funds4,6730.90.0Western Europe equity funds1,3490.30.2Japan equity funds9.40.2Asia Pacific equity funds9.70.1 Total Emerging Market equity funds1,0894.20.1GEM equity funds9.20.2EMEA equity funds-1.6-0.2Latin America equity funds8.80.2Asia ex-Japan equity funds-2.10.1Total bond funds4,5746.40.2 Corporate High Yield funds1.8-0.1 US bond funds2,4077.80.2 Western Europe bond funds0.30.1 Emerging Markets bond funds14.00.3 Asia ex-Japan bond funds1.20.0 Latin America bond funds8.9-0.2Money Market funds3,878-0.10.3Global Sector fundsCommodities/Materials3.9-1.2Consumer Goods-4.7-1.3Energy5.3-1.1Financials26.94.2Health Care/Biotech1.30.7Industrials46.51.0Infrastructure7.30.1Real Estate-1.2-0.2Technology14.10.4Utilities-4.6-0.9Europe country equity fundsGermany-4.20.2UK-2.40.0France-2.30.2Switzerland-0.50.0Thematic FundsConvertible bond funds-4.0-0.1Inflation Protected bond funds15.60.1Source: EPFR Global, Deutsche Bank calculationsDM equity funds (+) with Europe & Japan (+) vs. US (-): DM equity fundswere only able to gain marginally as hefty MF redemptions outweighed ETFgains (+0.0%, MFs: -0.1%, ETFs: +0.2%, lowest in 6 weeks). Regionally, inflowsacross Europe (+0.1%, MFs: +0.0%, ETFs: +0.3%) and Japan (+0.2%, MFs:+0.2%, ETFs:+0.2%, supported by Yen denominated inflows) offset US equityfund redemptions (-0.1%, MFs: -0.2%, ETFs: +0.1%). On a country basis, Europeinflows were driven by the continent whereas UK funds (-0.02%) posted weeklyoutflows for the 13th time over the past 15 weeks.EM equity funds (+) with EMEA (-) vs. Latam (+) & Asia ex Jap (++): Investorscontinued to see opportunity in EM equity funds (+0.2%, MFs: +0.1%,