Global Funds Outlook | Third Quarter 2019

Summary

‘Search for yield’ has emerged as the predominant driver of funds flows in the current low yield backdrop marked by a complicated global macro outlook and supportive central banks.

Key points

• Key points:
• The allure for higher yields has increasingly underpinned bond fund flows into EMs, Eurozone periphery as well as investment grade corporate and high yield bonds. Meanwhile, equities have failed to attract significant fund flows.
• Looking ahead, we expect portfolio inflows into EMs to continue at current modest pace as Fed begins its rate cut cycle while idiosyncratic factors weigh.
• Inflows to EMs remain vulnerable to potential shocks, characterized by a breakdown in US-China trade talks, a no-deal Brexit, geopolitical tensions and if the Fed disappoints.

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