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Bullish Fund Flows Return With A Vengeance: Largest Equity Inflow In 6 Weeks; Money Put Into Bonds, Commodities

The bullish fund flows are back. This is how Bank of America summarizes the latest EPFR capital flow sentiment: "Loving Wall Street: $15bn equity inflows + $5bn HY/IG inflows + 6 straight weeks of commodity inflows = investors are "risk-on"

Specifically, a surge in equity:

  • Equities: $14.6bn inflows (largest in 6 weeks) (note $12.3bn via ETFs – SPY, XLV, QQQ)
  • Bonds: $2.9bn inflows (3 straight weeks)
  • Commodities: 6 straight weeks of inflows ($0.3bn) (longest inflow streak in 8 months)

 

Virtually all the equity inflows were via ETFs:

Here Comes the Fed: Treasury funds record largest outflows in 17 weeks ($1.8bn) + bank loans record first inflows in 13 weeks = investors discounting Dec Fed hike

The Need for Yield: largest HY bond inflows in 8 months ($3.9bn); even retail-popular high-yielding MLP see inflows (investors redeemed $1.2bn from Jun-Sep’15); but once again, EM debt saw outflows

  • $3.9bn inflows to HY bond funds (3 straight weeks) (largest in 8 months in absolute terms)
  • $1.8bn outflows from Govt/tsy funds (3 straight weeks) (largest in 17 weeks); Largest inflows to IG bond funds in 12 weeks ($1.2bn)
  • $0.4bn outflows from EM debt funds (outflows in 13 out of 14

Like with equities, the bulk of the inflows in IG were via ETFs:

 

Europe & EM in Vogue: largest EM inflows in 16 weeks ($1.3bn); EU inflows in 22 out of past 24 weeks (another $3.2bn inflows this week, huge YTD inflow $106bn)

  • Europe booming: largest inflows in 8 weeks ($3.2bn) (inflows in 22 out of past 24 weeks)
  • Japan snaps back: $0.8bn inflows (2 straight weeks)
  • EM: $1.3bn inflows (largest in 16 weeks)
  • US: $7.8bn inflows (largest in 6 weeks & all via ETFs)

Biggest winners YTD: APAC equities (read Japan), Healthcare (despite sell-off), IG bonds, European equities (Chart 1)

 

Biggest losers YTD: industrials, LatAm equities, utilities, EM debt ($-denominated), EEMEA equities (Charts 4-5)