Investors start New Year on a low

The beginning of the New Year saw global investors shun risk and look for safety, which largely contrasts with the beginning of 2011, according to EPFR Global.

At the start of 2011, investors pulled over $14 billion out of money market funds and channelled nearly $11 billion into developed equity, emerging markets bonds and equity, as well as high-yield bond funds.

However, the beginning of 2012 saw equity funds posting net outflows of $1.64 billion, while bond and money market funds took in $5.5 billion in total.

"Hunger for yield and desire for safety continued their tug of war for the affection of investors in early 2012, with US bond funds again accounting for the biggest share of the new money absorbed by all EPFR Global-tracked bond funds," the researcher stated.

Emerging markets equity funds tracked by the researcher struggled at the start of the New Year by snapping a seven-week, $11.3 billion outflow streak that accounted for over a fifth of the total redemptions of 2011.

However, there was a slight thaw in sentiment towards funds focused on Europe, although fund groups associated with riskier or growth-oriented asset classes generally struggled.