One week ago we showed that in a surprising twist, even as the broader market has remains stable and trading rangebound between 2040 and 2080 over the past month, actual equity outflows had accelerated and one week ago EPFR reporter another $7.4bn in equity fund outflows (the 5th straight week) driven by $4.8bn in mutual fund outflows and $2.7bn ETF outflows, leading to a $44bn equity exodus past 5 weeks, which as Michael Hartnett points out is the “largest redemption period since Aug’11.”
Overnight we got the latest fund update and not surprisingly, the outflows from equities have continued.
BofA summarizes the latest flow as a “reversal in Shanghai Accord flows” noting the “1st outflows from EM debt funds in 13 weeks; largest Japan inflows in 10 weeks; and 1st outflows from TIPS funds in 14 weeks; 1st” and adds that EPFR reports another week of risk-off flows: $5.8bn equity redemptions vs $2.8bn bond inflows & $1.8bn precious metals inflows (= largest in 11 weeks).
A breakdown of asset class flows:
- Equities: $5.8bn outflows (6 straight weeks) (note $4.1bn mutual fund outflows and $1.8bn ETF outflows)
- Bonds: $2.8bn inflows (inflows in 11 of past 12 weeks)
- Precious metals: $1.8bn inflows (largest in 11 weeks) (inflows in 18 of past 19 weeks)
- Money-markets: $1.2bn outflows
Focusing just on equities:
- Japan: $0.6bn inflows (largest in 10 weeks) (2 straight weeks)
- Europe: $1.1bn outflows (15 straight weeks) (but smallest outflows in 6 weeks)
- EM: $1.6bn outflows (3 straight weeks)
- US: $4.9bn outflows (outflows in 5 of past 6 weeks)
- By sector, 13 straight weeks of REITs inflows ($0.5bn); 5 straight weeks of tech outflows ($0.5bn); largest outflows from healthcare in 7 weeks ($0.7bn)
Finally, some observations on how BofA’s private clients are positioned: everyone love low-vol and quality; everyone hates biotechs and “buybacks.”
- Private clients selling “ZIRP-winners” & “strong dollar” plays: ETF
losers YTD = buybacks, biotech, EAFE, healthcare, dividend themes. - Defensive sector rotation: into utilities, REITs out of tech.
- BofAML private client 2016 ETF flows show style bias toward “safety” & “inflation hedging”: ETF winners = low-volatility, quality, precious metals, utilities, TIPS – Chart 3).
- Style bias toward “safety” and “inflation hedging”: ETF winners = low-volatility, quality, precious metals, utilities, TIPS.
- Meanwhile, private clients selling “ZIRP-winners” & “strong dollar” plays: ETF losers YTD = buybacks, biotech, EAFE, healthcare, dividend themes.
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