The latest Lipper data will not provide the answer because as BofA reports, in the latest week there was another $7.4bn in 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”, or when the US downgrade sent US stocks into a bear market tailspin.
Digging into equity flows we find the following:
- Europe: $3.9bn outflows (14 straight weeks = longest streak since Feb’08)
- EM: $2.3bn outflows (largest in 16 weeks)
- Japan: ekes out $88mn inflows (ends 8 straight weeks of outflows)
- US: $2.2bn outflows (outflows in 4 of past 5 weeks)
By sector, 12 straight weeks of REITs inflows ($0.8bn); 4 straight weeks of tech outflows ($0.2bn); first outflows from financials in 4 weeks ($0.4bn)
Some other fund flow findings:
- Bonds: $3.5bn inflows (inflows in 10 of past 11 weeks)
- Precious metals: $1.0bn inflows (inflows in 17 of past 18 weeks)
- Money-markets: $10.9bn inflows (largest in 13 weeks)
Michael Hartnett summarizes the longer term flow trends: bonds & gold over stocks, IG over HY, TIPS & munis over Treasuries; Big $2.3bn EM equity outflow (largest in 16 weeks); accelerating outflows from Europe; 4th consecutive week of redemptions from tech funds, 12th week of inflows to REITs; Risk-off $10.9bn inflows to money market fund.
Trend from active to passive continues apace ($1.2tn to equity ETFs, $0.9tn from mutual funds since 2007 – Chart 1)
BofAML private client allocations to bond & equity ETF’s up from 3% of AUM in 2009 to 9% today
In conclusion, here is Michael Hartnett’s take on markets whilch “look” better than they “feel”