GREAT ROTATION: Treasury Bond Funds Have Their Worst Week Ever
"Great Rotation continues as weekly flows show record redemptions ($4bn) from Govt/Tsy funds vs robust inflows ($10bn) to Developed Market equities," says BofA Merrill Lynch chief investment strategist Michael Hartnett.
Also of note were outflows from BRICs equity funds, which were all the largest on record this past week – Brazil funds lost 1.8% of assets under management, Russia funds lost 0.8%, India funds lost 0.4%, and China funds lost 0.1%.
Below is a complete breakdown of this week's fund flow data, via Hartnett:
Asset Class Flows
Equities: $9.6bn inflows ($6.7bn via ETFs) (6 straight weeks)
Bonds: $2.2bn outflows (largest outflows in 4 weeks)
Precious metals: $0.6bn outflows (record-extending 26 straight weeks)
Equity Flows
Strong $1.8bn inflows to Europe (6 straight weeks)
$5.7bn inflows to US (6 straight weeks) ($4.2bn via ETFs)
$0.7bn inflows to Japan (inflows in 28 out of past 29 weeks)
$0.7bn outflows from EM equity funds; BRICs all record outflows
Fixed Income Flows
$4.0bn outflows from Govt/Tsy (largest on record in absolute terms); caveat is that outflows from IEI (iShares 3-7y Treasury Bond ETF) accounted for half the redemptions
17 straight weeks out of TIPS ($0.4bn)
11 straight weeks out of Munis ($0.9bn)
11 straight weeks out of EM debt ($0.4bn); but pace of outflows slowing
59 straight weeks of inflows to leveraged loan funds ($2.0bn)
$1.3bn inflows to HY bond funds ($12bn inflows over past 6 weeks)
3 straight weeks of small inflows to IG bond funds ($0.4bn)