The AFPs have pulled more than $1 billion, net, from US stock funds in September while adding a net $629.8 million to its European equity allocation, their largest injection into that asset class so far this year.
The data, from a report by Chilean asset manager and distributor HMC Capital, showed that the AFPs have withdrawn more than $3.9 billion net from the US so far this year while increasing their net Europe allocation by over $3.3 billion.
‘The rotation from the US toward Europe and emerging markets continued in September, even stronger than in previous months,’ said HMC’s co-distribution head Nicolás Fonseca.
High valuations and the Federal Reserve’s rate hikes have sparked the AFPs to retreat from the US, according to past comments by Fonseca. Meanwhile, investors have poured into Europe due to factors such as positive earnings growth in 2017 after years of negative figures.
Earlier this year, Asia dethroned the US as the AFP’s top foreign equity allocation. The pension funds poured a net $490.3 million into theregion in September, mostly into China, swelling their Asia allocation to more than $16.7 billion.
The pension funds' total European allocation is now at $11.5 billion and $8.9 billion to the US.
Turning to Latin America, the AFPs invested a net $252.8 million in the region’s stock funds and separately $133 billion in Brazil through the iShares MSCI Brazil Capped ETF.
On the fixed income side, emerging market debt continued to be a favorite in September. The AFPs invested close to $390 million net in the asset class, chiefly in Latin America, bringing their total allocation to almost $9.4 billion.
In September, the three equity mutual funds that received the most inflows were the Allianz Euroland Equity Growth with a net $222.1 million, the Goldman Sachs Emerging Markets Core Equity Portfolio with $185.7 million and the Henderson China Opportunities with $145.3 million.
On the fixed income side, the Investec Latin American Investment Grade Corporate Debt received $102.6 million, the Pimco Income Fund $78.7 million and the Santander Latin America Corporate Bond $74.9 million.