INVESTORS RUSHING OUT OF US EQUITIES INTO EU AND EM EQUITIES
EPFR reported that there was a whopping $9.9bn inflow into equities and $10.7bn into bonds (nearly all corporate bonds), as global stock markets and credit indexes hit all-time highs.
Where is all this new money going? For those following EM and Europe moves in recent weeks, it will come as no surprise, that of the $24BN in outflows from US stocks in the past 3 months, $19BN have gone into European stocks & $20BN into EM stocks, driven by more attractive rates & EPS outlook.
For now, all those rushing into the "hottest" new thing have been rewarded: annualized YTD returns for some of the biggest uses of cash include
- Tech stocks at 55%,
- EM stocks 50%,
- Biotech 36%, E
- AFE stocks 33%,
- European HY 27%,
- Banks 27%,
- US stocks 18%, and
- US CCC HY 16%.
All this is taking place amid a backdrop of what Hartnett calls "lovey-dovey central banks" - Fed/ECB/BoJ all turned dovish in recent weeks, and the only bond sectors with outflows this week were Treasuries and floating-rate bank loans (latter previously big YTD inflow winner in anticipation higher rates).
This was offset by the biggest inflows into Junk Bonds in 3 months as investors aggressively buy "yield" theme.
