The final November fund flow numbers are in, and as BofA's Michael Hartnett puts it, November, it was a "watershed" month for fund flows with the largest 5-week
bond outflows in three and a half years at $10 billion...
... the largest 3-week precious metals outflows
in 3.5 years...
... and the largest 5-week equity inflows since October 2013 at $34.5 billion.
Focusing on just the last week, the "Trumpflation rotation" out of bonds and into stocks continued, with $4.4 billion in bond outflows, $0.6 billion precious metals outflows vs $1.2 billion in equityinflows according to Bank of America, which writes that investor flows have stabilized following violent post-US election flows; In fact, a mini revulsion may already be forming with the first TIPS outflows in 6 months, first EM equity inflows in 5 weeks, first HY bond inflows in 5 weeks and first utilities inflows in 5 weeks.
Some further observations from Hartnett who notes that while November was "Fast & Furious" there was no Euphoria: despite the strongest 4-week equity inflows in 2 years, a sharp drop in FMS cash to 5.0% and a big US equity rally, our sentiment signals have actually shifted in a more contrarian bullish direction in recent weeks. In fact, our BofAML Bull & Bear Indicator has fallen to 3.0, the lowest reading in 4 months, on the back of big redemptions from high-beta EM equity funds, EM debt funds & HY bond funds.
Broken down by asset class shows that the trend of flows out of active managed funds and into ETFs continued:
- Equities: small $1.2bn inflows (note $6.3bn ETF inflows vs $5.2bn outflows from mutual funds)
- Bonds: $4.4bn outflows (5 straight weeks = longest streak in 14 months)
- Precious metals: $0.6bn outflows (3 straight weeks)
Looking only at Equity Flows:
- Europe: $2.0bn outflows (largest in 11 weeks)
- US: $4.4bn inflows (4 straight weeks)
- EM: ekes out first inflows in 5 weeks (albeit small $0.1bn)
- Japan: small $0.1bn inflows
- By sector: 10 straight weeks of financials inflows ($0.6bn); 4 straight weeks of REITs outflows ($0.1bn)
And then fixed income, which saw 5 straight weeks of outflows from muni bond funds ($1.6bn)
- 4 straight weeks of outflows from IG bond funds ($2.4bn)
- 4 straight weeks of outflows from EM debt funds (albeit small $0.1bn)
- 3 straight weeks of outflows from govt bond funds ($0.7bn)
- First TIPS outflows in 25 weeks ($0.3bn)
- First HY bond inflows in 5 weeks ($0.6bn)
- Inflows to bank loan funds in 20 of past 22 weeks ($0.6bn)
However, it may all go just as fast as it came: according to Bloomberg, U.S. global-focused ETFs saw a net $742.5m of capital outflows on Dec. 1 - the funds have shrunk a net $1.5b in the past five days. Investors have put a net $23.3b into the funds in 2016. Should the risk-off sentiment persist, more outflows are likely.