The tech scare, which hit earlier this summer, is long forgotten and clearly over because according to the latest EPFR data compiled by Bank of America, the past week saw the second largest week of inflows to tech on record ($1.0bn) and the largest week of inflows was late Jan'17.
Beside this surge into high-growth names, BofA observes that flows this week saw $5.6bn into bonds, $2.7bn into equities, offset by $18mn outflow from gold. The equity inflows were once again entirely thanks to ETFs at the expense of carbon-based traders: the 5th straight week of inflows ($2.7bn) saw $8.0bn into ETFs offset by $5.3bn outflows from mutual funds.
Some other observations:
- Cyclical-on in sectors: largest inflows to materials in half a year, largest inflows to financials in 7 weeks.
- End of QE: three potential Great Rotations post QE: asset, regional, style/sector; However, as BofA's Michael Hartnett points out, flows show the regional rotation has been the only one that investors have acted upon ($5bn outflows from US equities YTD vs $117bn inflows to non-US equities)
- Risk-on in bonds: HY & EM debt see inflows vs 1st outflows from Treasuries in 6 weeks
- BofAML Bull &Bear Indicator: remains at 7.0 as improvements in flows & equity breadth offset by less bullish hedge fund positioning
Some more details on equity flows:
- US: outflows 12 of past 14 weeks ($0.3bn)
- EM: 5th straight week of inflows ($2.0bn)
- Japan: first outflows in 10 weeks ($1.4bn)
- Europe: inflows 10 of past 11 weeks ($1.8bn)
- By style: biggest US value fund outflows in 17 weeks ($1.6bn), US growth outflows 8 of past 9 weeks ($1.7bn), tiny outflows from US small caps ($12mn)
By sector: inflows to energy ($0.3bn, 4th straight week), tech ($1.0bn, second-largest ever), financials ($1.1bn, largest in 7 weeks), consumer ($0.3bn, 4th straight week), healthcare ($0.6bn, 4th straight week), utilities ($0.2bn), materials ($0.3bn, largest in 26 weeks); outflows from real estate ($0.3bn)
Looking at the "cash on the sidelines", BofA finds none there as Private Clients flows: equity allocation highest in 22 months (60.2%) while cash & debt allocations fall
It's not just equities however, as bonds just had 27 straight weeks of inflows, with another $5.6bn added in the last week. The breakdown:
- 39 straight weeks of IG bond inflows ($4.3bn)
- Inflows to HY bond funds 3 of past 4 weeks ($0.2bn)
- Inflows to EM debt funds 34 of past 35 weeks ($1.3bn)
- 11th straight week of inflows to muni funds ($0.4bn)
- Small outflows from TIPS funds ($0.1bn)
- First outflows from govt/Tsy funds in 6 weeks ($0.5bn)
- 6th straight week of outflows from bank loan funds ($0.1bn)
In short, retail continues to flood into the market as institutions take advantage to sell to "mom and pop", who just can't get enough, especially when it comes to ETFs.
Finally, here is BofA's asset class "quilt" of total returns.