For the first time since last March, equity funds are seeing net inflows so far in November. Also, it is worth noting that equity funds are also seeing larger inflows than bond funds for the first time since last December, fueling equity outperformance. This goes in-line with the latest BofA Merrill Lynch’s monthly fund manager survey, which showed that average cash holdings declined to 5% of managers’ portfolios in November, down from the historically high 5.8% in October.
This was the largest drop since August 2009. Market internals remain positive for now with transportation, investment banks, semiconductors and weak balance sheet stocks still outperforming. Also, as illustrated below, the equity outperformance hasn’t yet reached extreme levels and still remains well within its long-term range.
