Double dip fears sends investors to cash-EPFR

*U.S. equity fund redemptions $10 bln in week

*Investors hide in money market funds; $33.5 bln in inflows

*Second half of 2010 begins with “double dip” fears

By Jennifer Ablan

NEW YORK, July 9 (BestGrowthStock) – Equity funds worldwide
suffered more than $11 billion of net outflows in the first
week of July, while money market funds saw the biggest inflows
in 18 months amid fears of a double-dip recession, EPFR Global
said on Friday.

Money market funds, an equivalent of cash for many
investors, had inflows of $33.5 billion, while equity funds saw
$11.25 billion move out of the door, fund tracker EPFR said in
a statement.

Bond funds in aggregate absorbed another $3.64 billion for
the week ended July 7 and global emerging markets equity funds
took in $517 million.

Investors have become increasingly concerned about
faltering economic growth after a rash of weaker than expected
data. Last week, a report showed U.S. employers cut far more
jobs than expected in June and the unemployment rate hit 9.5
percent — the highest in nearly 26 years.

Double dip is a term that refers to a recession followed by
a short-lived recovery. The World Bank said in June that a
double-dip recession could not be ruled out in some countries
if investors lose faith in efforts in Europe and elsewhere to
tackle rising debt levels. [ID:nSGE659004]

“Worse than expected U.S. labor and housing market data and
fear of what stress tests of major European banks will reveal
continued to weigh on sentiment towards the major developed
market and the funds that invest in them during the first week
of July,” EPFR said.

EMERGING MARKET EQUITIES

Investors regained some confidence in the fund group in the
latest week, sending fresh money to Asia.

Global emerging market equity funds saw $517 million in
inflows and Asia ex-Japan equity funds absorbed $124 million.

Europe, Middle East & Africa funds and Latin America
focused funds had outflows, suggesting willingness to take
risks is still tentative.

Latin America posted its 13th consecutive week of outflows,
driven by fears of a knock-on effect if the U.S. economy slows
significantly.

DEVELOPED MARKET EQUITIES

Funds investing in the United States, the European Union’s
biggest export market had a rough week, with overall
redemptions from U.S. Equity Funds exceeding $10 billion for
only the second time this year.

Japan equity funds also posted outflows, their seventh in
the past nine weeks, as a dip in domestic capital spending,
questions about the effect of the yen’s appreciation on Japan’s
exports and uncertainty about economic policy made investors
cautious.

SECTOR FUNDS

The lure of gold and precious metals as a hedge against
uncertainty helped commodity funds top the list of EPFR
Global-tracked sector funds once again in early July, with
investors committing $419 million to this fund group, taking
year-to-date inflows past the $11 billion mark.

The consumer goods sector funds were the second biggest
absorbers of fresh money, pulling in $226 million.

FIXED INCOME FUNDS:

Emerging market bond funds continued to soak up fresh
money, despite waves of risk aversion.

In the latest week, the fund group saw $740 million in
inflows.

Investors pulled $113 million out of high yield bond funds.
U.S. bond funds attracted over $2.3 billion for the week, with
funds investing in short-term and municipal debt posting the
biggest inflows.

Global bond funds took in a net $631 million as brisk
demand for recent European sovereign issues alleviated concerns
about their generally heavy exposure to this region.
(Editing by Tomasz Janowski)

Double dip fears sends investors to cash-EPFR