U.S investors have been pouring additional money into bond funds, each and every week, ever since December 2008. This historic streak for bond fund inflows has been an enduring sign of post-crisis sentiment, but last week it finally came to an end.
“Bond funds suffered outflows of $4.33 billion, the first week of outflows since December 17th, 2008,” according to Citi’s Tobias Levkovich in a recent note.
Meanwhile, the outflow of money from equity funds is slowing, but yes, remains an outflow.
Citi’s Tobias Levkovich:
According to ICI, investors withdrew $1.16 billion to total equity funds for the week-ending November 17.
Domestic funds experienced outflows of $2.80 billion while foreign funds posted inflows of $1.63 billion.
For overall equity funds, the four-week moving average dropped to an outflow of $302 million from the prior week’s inflow of $507 million.
Thus there’s still a long way for sentiment trends to reverse in favour of stocks and against bonds, and what happened last week could be the key inflection point ahead of a new trend. If you look at equity fund flows since the crisis in 2008, it’s clear there’s a lot of room for fund flows to come back to stocks.
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