Equity funds investing in those countries posted solid inflows in the week ending Aug. 17, while those investing in the United States and Japan had net redemptions, the fund tracker said. "At least in the developed markets space, investors are heeding the old dictum that, in tough times, you invest in the creditor, not the debtor," Brad Durham, managing director at EPFR Global, said in a statement. It was the fifth consecutive week of outflows for US equity funds — their longest losing streak since January 2010. However, redemptions were less severe than in the previous week, which followed the downgrade of the US credit rating by Standard & Poor's. On the other hand, flows into funds investing in Canada hit a 20-week high. Those investing in Switzerland recorded their strongest weekly flows since the beginning of the fourth quarter of 2010. Outflows from emerging markets equity funds slowed during the past week but still came in at $2.77 billion. Most of the selling happened in Asia ex-Japan, as investors worried about exports from the region, EPFR said. Overall, equity funds surrendered $5.81 billion during the week, less than a quarter of the previous week's total, while money market funds followed up last week's record setting inflow of $50 billion by absorbing a modest $1.93 billion. Global-tracked bond funds had net redemptions of $4.1 billion, as investors still digested the implications of recent sovereign downgrades and the U.S. Federal Reserve's vow to keep rates low into 2013, EPFR said. Outflows were stronger from high-yield bond funds, EPFR said, as investors worried about the ability of weaker borrowers to keep servicing their debts. Floating rate funds had their worst week in record in dollar terms after the Fed's commitment to low rates. Emerging market local currency and mortgage backed bond funds, however, were among the few subgroups recording inflows. In the United States, flows into corporate and mortgage-backed bond funds were eclipsed by outflows from floating rate, municipal and intermediate funds.
