Flows into mutual funds and related investment products showed sharply higher net purchases of equity products, steady inflows into fixed income, and another week of FX flow into CNY and JPY; of these the most notable was the $51.2BN going into stocks (with the usual distribution of $52.7bn into ETFs, offset by $1.6bn out of mutual funds) - the largest inflow since March 21 - following +$13bn the prior week; Separately $16.1BN went to bonds, a tiny $37MM to gold (still the largest in 6 weeks), all coming out of money markets, as cash saw a decline of $61.8BN, the largest outflow since July 20.
The acceleration reﬂected higher net inﬂows into the US market, which saw $45.7 billion in inflows, the most since March 21, while flows into global benchmark products and EM equities decelerated slightly, and demand for non-US DM equity products was roughly steady:
- Japan: largest inflow in 3 weeks ($0.1bn)
- Europe: largest inflow in 4 weeks ($0.1bn)
- EM: inflows past 6 weeks ($1.8bn)
By sector, the largest net inﬂows (scaled by AUM) were into industrials.
Commenting on this week's fund flows, in his latest Flow Show note (more in a subsequent post), BofA's Michael Hartnett noted a "monster reallocation" in cash to stocks as the "tax redistribution threat" recedes and "as Fed was expected to remain Wall St-friendly", leading to what the latest Fund Manager Survey dubbed the easiest liquidity since the peak of the last credit bubble in July 2007 (a finding confirmed by Goldman's own liquidity indicator which has never been easier).
And with the floodgates now open, besides the massive equity reallocation, last week also saw the largest inflow to US large cap funds ever ($28.3bn), the 12th week of tech inflows with $3.2BN entering this week, the largest since Mar’21...
... and the largest inflows to energy since Jun’21, at $1.0BN.
Summarizing the inflow distribution by style:
- US large cap ($28.3bn),
- US growth ($6.9bn),
- US small cap ($4.2bn), US value ($1.6bn).
And by sector:
- tech ($3.2bn),
- consumer ($1.1bn),
- healthcare ($1.0bn),
- energy ($1.0bn),
- financials ($0.6bn),
- materials ($0.3bn),
- utils ($0.2bn),
- com svs ($0.1bn),
- real estate ($95mn).
Away from equities, flows into global fixed income funds also picked up slightly on the week (+$16bn vs +$13bn the prior week), the largest inflows in 10 weeks, as most product categories experienced higher net inflows, with the exception of IG credit funds and EM bond funds, both of which saw moderately lower (but still positive) net inflows. Here is the full breakdown:
- Largest IG bond inflow in 3 weeks ($8.7bn)
- HY bond inflows past 3 weeks ($1.1bn)
- EM debt inflows past 3 weeks ($1.4bn)
- Largest Munis fund inflow in 3 weeks ($1.2bn)
- Largest MBS inflow since Apr’21 ($1.0bn)
- Govt/Tsy fund inflows past 2 weeks ($1.0bn)
- TIPS inflows past 43 weeks ($1.0bn)
- Bank loan inflows past 8 weeks ($0.6bn)
Within EM bonds funds, the mix of demand shifted toward hard currency and away from local currency this week. Money market fund assets declined by $62bn.