The US Federal ReserveÆs $200 billion liquidity pledge on March 11 triggered significant flows of fresh money into EPFR Global-tracked US equity and bond funds, financial sector funds and money market funds.

Confidence appeared to be returning to US municipal bond funds last week, following the abysmal performance of US municipal bonds in February, as funds investing in this debt posted their largest weekly inflow this year, according to EPFR Global data. Based in Massachusetts, EPFR tracks around $10 trillion in assets in traditional and alternative funds worldwide.

There were also modest inflows into utilities, real estate, technology, consumer goods and telecom sector funds last week while Pacific equity funds took in fresh money for only the second time this year.

However, all four of the major emerging markets equity fund groups posted outflows, with the commodities and materials sector rich Europe, Middle East, and Asia (EMEA) and Latin America equity funds faring better than some. Europe, Japan and global equity funds also suffered net outflows for the week.

Despite gold making a run at $1,000 an ounce and oil touching $110 a barrel, the picture for funds geared directly and indirectly to the global commodities story û which investors have been gravitating to this year to offset the dollarÆs slump û was mixed. Emerging market bond funds absorbed fresh money, as did single-country equity funds geared to major commodity producers such as Russia and South Africa. But commodities and energy sector funds both posted outflows.

ôSome fund managers and investors are clearly worried about the bubbles they see in the commodities and energy markets, and they feel that the FedÆs efforts to ease the credit squeeze will result in more money being pumped into these already overheated asset classes,ö says Massachusetts-based EPFR Global analyst Cameron Brandt.

Fresh evidence that the US Federal ReserveÆs main focus is growth rather than inflation, in the form of a $200 billion liquidity injection into the US financial system, fuelled a sharp rally in US equities during the second week of March. It also encouraged investors who believe the fallout from the subprime debt crisis has touched bottom. But it also fuelled a further slump in the value of the dollar that did little for investor sentiment towards the export-driven Japanese and Eurozone economies.

EPFR Global-tracked US equity funds took in a net $1.91 billion last week, with daily data showing that most of that new money arrived on March 11 and 12. Flows were, however, shaped by two large index funds û the iShares Russell 200 Index Fund and the Financial Select Sector SPDR ETF û that absorbed over $2 billion apiece. The additional liquidity did little for funds managed for growth. They were outperformed by their value counterparts across all capitalisations and only large cap growth funds did better in flow terms.

Pacific equity funds, which have paid heavily this year for their large exposure to out-of-favour Japan, posted a rare week of inflows as investors committed fresh money to them for only the second time in 13 weeks. But the other major diversified fund group geared primarily to developed markets, global funds, posted net outflows of $740 million.

While a strong commodities story provided some protection, most emerging markets suffered during the second week of March as investors fretted about the loss of export competitiveness in the face of a slumping dollar and showed little confidence in the theory that key emerging markets have decoupled from the US economic cycle. They pulled $2.01 billion out of the diversified global emerging markets funds, $714 million out of Asia ex-Japan funds and modest amounts -- around 0.1% of assets under management -- from EMEA and Latin America equity funds.

Elsewhere, Taiwan equity funds recorded inflows for a seventh straight week ahead of a presidential election in late March that is widely expected to consolidate power in the hands of a more pragmatic administration that will take a more conciliatory approach to China. Taiwan equity funds have now attracted net inflows of $636 million year-to-date, a marked contrast to the $4.8 billion of outflows from China equity funds and Greater China equity funds.

But Malaysia equity funds, which started the year with an eight-week winning streak, posted its third consecutive week of outflows as this traditionally defensive marketÆs government emerged badly weakened from the March 8 general election. The breakdown for this market's fund flows wasn't available, however.