We’re far enough into 2024 to start talking about YTD “trends” in equity fund flows.
So far, it’s been all emerging markets with anomalous inflows to China, where stocks are beset, confidence is abysmal and officials are working “around the clock” (as Bloomberg put it) to rescue local shares from a multi-year bear market.
Take this week, for example. EM equity-focused ETFs and mutual funds saw a record $20.8 billion inflow, with $19.8 billion going to China. That, BofA’s Michael Hartnett wrote, “was likely driven by public funds.”
The figure above gives you some context for the scope of the inflows to EM. The four-week average now nearly exceeds the largest single-week inflow on record.
Meanwhile, back at the ranch, US equity-focused funds saw their largest outflow since September over the latest weekly reporting period, a near $16 billion exodus.
For the year, net flows to US equities are negative to the tune of $10.3 billion.
Recall that last year’s US equity fund flows story was defined by an inflection around Nvidia’s Q1 report and the debt ceiling deal, then an acceleration as stocks rallied into year-end.
So far, total net global equity fund flows in 2024 are $43 billion — $48 billion to EM funds and $5 billion from DM funds.
US individual investor sentiment remained buoyant in the latest weekly update on AAII’s survey, with the bullish index holding at 49%.
The bull-bear spread rose to 26.5%, above the long-term average for the 14th straight week.
This week’s special AAII question asked retail investors for their opinion on the Fed decision. 79% said the Fed was right to hold rates. 9% said they should’ve cut. 5.5% said they should’ve hiked.
Amusingly, nearly 6% of individual investors polled either weren’t sure or had no opinion about the January FOMC meeting.
While it’s easy to lampoon the idea that any investor, no matter how small, would be unaware of the Fed or else so unconcerned as to have no opinion about the trajectory of monetary policy, particularly at such a critical juncture, the truth is, that 6% probably has it right: Sometimes (often), being “informed” about markets, macro and policy is an impediment to success. “Too much information,” so to speak.
