Investors Dump Equities And Pile Back Into Bonds

Over the past week, following the Federal Reserve's surprise decision to refrain from tapering quantitative easing last Wednesday, bond funds snapped their 8-week streak of outflows as investors piled $4.5 billion into the asset class, the largest weekly inflow in five months.

Meanwhile, equity funds saw $1.5 billion in outflows. U.S. equity funds in particular were hit hard, losing $7.4 billion to redemptions. Europe, however, remained hot, as investors poured another $2.3 billion into European equities.

Below is a complete breakdown of this week's flows, via BofA Merrill Lynch chief investment strategist Michael Hartnett:

Asset Class Flows

Bonds: $4.5bn inflows (largest in 5 months) (ends 8w outflow streak)

Equities: $1.5bn outflows after last week's record inflows (note $4.3bn ETF outflows vs $2.7bn LO inflows this week)

Commodities: $0.4bn outflows

MMF: $16bn inflows ($68bn inflows over past 2 months)

Equity Flows

EM: $1.9bn inflows (all via ETFs - EEM); inflows mostly via GEM funds

Europe: 13 straight weeks of inflows ($2.3bn) (longest inflow streak since 2006)

Japan: $0.8bn inflows (3 straight weeks)

US: $7.4bn outflows after monster $17bn ETF inflows last week

Fixed Income Flows

First inflows ($0.6bn) to EM debt funds in 18 weeks!

First inflows (albeit small $59mn) to Muni funds in 18 weeks!

Largest inflows ($1.0bn) to IG bond funds in 17 weeks!

Largest Inflows ($4.0bn) to HY bond funds in 9 weeks

66 straight weeks of inflows to floating-rate debt ($0.4bn)

24 straight weeks of outflows from TIPS ($0.6bn)