US equity-focused ETFs and mutual funds enjoyed an eighth straight inflow over the latest weekly reporting period.
Although there are good reasons to doubt some of the “all-in” positioning narratives swirling around after last month’s “everything rally,” it’s certainly the case that sentiment inflected meaningfully for the better over the past several weeks. And that some folks acted accordingly.
Since mid-October, inflows to US stock funds come to more than $64 billion.
That inflow accounts for (nearly) the entirety of 2023’s net cumulative haul. Through October 11, net flows to US equity funds were barely positive for 2023.
It’s been a roller coaster year for US equity fund flows. Regular readers know the story, but I’ll briefly recapitulate.
Through mid-May, investors had redeemed a net ~$68 billion from US-equity focused funds. The tide turned with Nvidia’s Q1 report and, a week later, the debt ceiling deal.
But it wasn’t smooth sailing from June through September. Flows were choppy as investors navigated the tumultuous waters around a vicious selloff at the long-end of the Treasury curve. It wasn’t until November when the game truly changed.
The sea change in US equity fund flows created a much better balance between DM and EM. During the first half of 2023, “global” equity fund flows was synonymous with EM (i.e., there were net outflows from DM products). Now, with a few weeks left to go, global equity inflows for the year stand at $148.4 billion, $62 billion of which is attributable to DM. (I assume this is obvious, but behind the scenes, the active-to-passive shift is ongoing, with ETFs seeing steady inflows against outflows for mutual funds.)
On the individual investor sentiment front, AAII’s bull index pulled back a bit this week, to 47.3% from 48.8%. Bearish sentiment moved up markedly, to 27.4%, but from a very low level.
Recall that the prior week’s bearish reading was just 19.6%, the lowest since January of 2018, the height of the short-vol bubble and just prior to “Vol-pocalypse”
Elsewhere on the flows front this week, both IG and junk credit saw a sixth straight weekly inflow, while Treasurys saw the largest weekly outflow since August of 2022. The big flow winner was — drumroll — cash, with a monumental $93 billion haul, the largest since SVB collapsed in March.
As a reminder (i.e., if you didn’t read my update) this week’s ICI release showed US money funds took in nearly $62 billion, running total AUM to $5.9 trillion.
For the year, US money funds have taken in nearly $1.2 trillion.
