The Great Rotation continued for one more week today with global equity funds receiving $21 billion in inflows in the past week according to Bank of America, the ninth-biggest inflow ever, as investors rushed into 'Trump trade', while money flowed out of bonds for seventh week in a row. The EPFR-based report showed overall equity inflows of $63 billion since Donald Trump's U.S. presidential election win on Nov. 8, offsetting somewhat the $151 billion in outflows observed from January to October.
The bulk of the inflows, or $18.5 billion, went into U.S. stocks, although European and emerging equity funds also benefited from inflows of $700 million and $1 billion respectively.
However, for yet one more week news for the "active managed" community was negative: of the $20.7 billion in equity inflows, $31 billion was in the form of ETFs, which meant another $10 billion in outflows from mutual funds and other active vehicles.
BofA's Michael Hartnett added that the "risk rally is broadening" and "this week sees rising inflows to laggards …Europe ($0.7bn), Emerging Markets ($1bn), High Yield bonds ($4.7bn)." As Reuters observes, materials, financial, energy and industrial firms have seen the biggest boost since Trump's victory, with ETF holdings of materials assets up 25 percent and more than a fifth for financials.
Meanwhile, bond funds, however, saw a $4.4 billion outflow for their longest losing streak in three years, while gold lost $700 million. Emerging debt funds lost $1.2 billion for their sixth week of outflows.
Confirming the enthusiasm for reflation trades, almost $5 billion moved into junk bonds, the most in nine months, while inflation-linked securities, TIPS, received $300 million for their 25th week of inflow out of 27.
Here are the details:
Asset Class Flows
- Equities: $20.7bn inflows (9th largest week on record; note $31bn ETF inflows vs $10bn outflows from mutual funds)
- Bonds: $4.4bn outflows (7 straight weeks = longest streak in 3 years)
- Precious metals: $0.7bn outflows (5 straight weeks)
Fixed Income Flows
- Inflows to TIPS 25 of past 27 weeks ($0.3bn)
- 6 straight weeks of outflows from EM debt funds ($1.2bn)
- 5 straight weeks of inflows to bank loan funds ($1.5bn)
- Largest inflows to HY bond funds in 9 months ($4.7bn)
- Largest outflows from IG bond funds in 21 weeks ($4.7bn)
- 7 straight weeks of outflows from muni bond funds ($2bn)
- Moderate outflows from Govt/Tsy funds ($1.9bn)
Equity Flows
- EM: $1bn inflows (largest in 7 weeks)
- Europe: $0.7bn inflows (only 8th week of inflows YTD)
- Japan: modest $0.7bn inflows
- US: $18.5bn inflows
- By sector: 12 straight weeks of financials inflows ($0.6bn), 6 straight weeks of REITs outflows ($1.2bn)