It finally happened.
After an uninterrupted streak of weekly inflows that saw more than $776 billion plowed into global equity funds over nine months, investors pulled money from stocks.
The $24.2 billion exodus was the first weekly outflow of 2021 (figure below) and came amid concerns over the fallout from Evergrande’s demise and jitters around the outlook for Fed policy.
The previous reporting period witnessed one of the year’s largest inflows, as investors poured more than $51 billion into stock funds over just five days, while pulling $40 billion from money market funds, on ICI’s data.
The prior week’s “monster reallocation from cash to stocks,” as BofA put it, slammed into reverse in recent days. The outflow from global equities (red in the figure above) was the largest since March of 2020 and was accompanied by the biggest dash to cash since May.
Total money market fund assets increased by more than $50 billion over the week ended September 22, ICI data showed (figure below).
The $4.5 trillion pile of “sideline cash” (black line in the figure, above) is part and parcel of most bullish equity outlooks. It’s “dry powder” to buy dips.
“Global equity flows and global equity prices are 93% correlated since 2002,” BofA’s Michael Hartnett remarked, in his latest. “Both are at all-time highs.”
BofA private clients sold equities for a fourth straight week.
Notably, tech funds saw their first outflow since June, and US equities suffered their worst exodus since February of 2018 (so, since “Volpocalypse”) at $28.6 billion.
The outflow from US large caps was $14.2 billion, erasing half of the prior week’s $28 billion inflow, which was the largest weekly haul ever.
