"Trump Trade" Leads To Ninth Biggest Weekly Inflow To Equities, More Bad News For Active Managers
By Tyler Durden
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)
Source: "Trump Trade" Leads To Ninth Biggest Weekly Inflow To Equities, More Bad News For Active Managers
