Buy 5 Global Equity Funds As Inflows Touch 2-Year Highs
Zacks Investment Research | May 22, 2017 10:35PM ET
Investors are shifting their focus to global equity funds from domestic equity funds following concerns over President Trump’s ability to implement his pro-growth economic proposals. According to Investment Company Institute’s latest fund flow report, stock funds investing globally have registered the best inflows since April 2015. In contrast, domestic equity funds have registered significantly strong outflows over the last few weeks.
Moreover, recently released economic data indicates that the world’s major economies, including China and Europe are gradually picking up pace. Given their bullish economic backdrop, these countries offer lucrative investment propositions. Global mutual funds are excellent options for investors looking to widen exposure across countries and might be a sensible investment option.
Global Equity Funds Post Best Inflows Since 2015
As per the latest Investment Company Institute (ICI) weekly fund flow report, domestic equity-based funds have recently seen heavy outflows, whereas global equity funds continued to attract investors. In the week ended May 10, equity funds reported inflows of $7.243 billion. While domestic equity funds witnessed outflows of around $991 million, international equity funds saw inflows of $8.234 billion.
According to Lipper’s weekly fund flow report for the same period, equity fund flows remained mixed last week. Total inflows in international equity funds reached $4.810 billion, registering nine consecutive weeks of gains. Meanwhile, domestic equity funds posted outflows of $6.045, posting third straight weeks of declines.
Why Buy Global Equity Funds?
If selected carefully, global mutual funds have the potential to offer secure and attractive investment opportunities. Different studies over the years have shown that a portfolio with both domestic and foreign securities helps in reducing risk while enhancing returns. Also, a steady decline in U.S. equity funds demand might encourage investors to consider diversifying their investments throughout the globe.
Separately, China and Europe have reported encouraging economic data recently.For instance, China’s GDP rose 6.9% in the first quarter of this year, marginally better than prior quarter’s increase of 6.8%. The world’s second biggest economy registered its quickest GDP growth since 2015.
Additionally, retail sales and factory output data remained upbeat in April. According to the National Bureau of Statistics, retail sales rose 10.7% year over year, relatively better than a rise of 10.1% in the previous year. Industrial production also increased 6.5% year over year, which is better than a rise of 6% registered in the prior year.
Moreover, Europe’s GDP is expected to increase about 2% after growing 1.7% in 2016. Meanwhile, growth in U.S. GDP is expected to expand 1.6% this year. Overseas, purchasing managers’ indices are strong, with Germany’s at a six-year high. The key economic metric of productivity is also increasing at a faster pace in Europe than in the U.S. (Read More: Zacks Investment Research
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