Weekly Fund Flows Report

Overview

More than $129 billion flowed into cash funds for the week ending September 25, according to a report from Bank of America. This inflow is the largest in 18 months.

Equity Inflows

Equities attracted $25.4 billion in the same period:
– U.S. Stocks: $10.9 billion (YTD inflows at an annualized $363 billion, the second-largest on record)
– European Stocks: $600 million (largest inflow in five months)
– Emerging Market Equities: $9.7 billion (fourth-largest inflow of 2024)

While tech funds saw minor outflows of $200 million, year-to-date inflows in this sector are projected to reach a record of $60 billion.

Wall Street Positions

Bank of America’s strategists note that Wall Street’s conviction trades include:
– Long positions in gold and tech
– Short positions in 30-year Treasuries and China

They predict that the current bullish rotation will persist until a recession prompts a shift from stocks to bonds or a sharp rise in bond yields disrupts gold/tech leadership.

International Equity Outlook

BofA suggests investors might consider international equities, particularly due to China’s ongoing stimulus efforts aimed at enhancing growth through measures like Reserve Requirement Ratio (RRR) cuts and reduced mortgage rates for households.

However, they warn that if the China stimulus fails, geopolitical risks could increase significantly.

Other Flows

• Investment-grade (IG) funds: $10.2 billion inflow, bringing YTD inflows to an annualized $415 billion (record pace)
• U.S. Treasuries: experienced a $1.6 billion outflow, the largest in four weeks since December 2023
• Emerging Market (EM) debt: saw $1.2 billion inflows, the largest since January 2023.