Cash once again captured the majority of inflows last week, but significant investments continued to flow into equities, particularly in the U.S., Bank of America (NYSE:BAC) said in its latest report.
Citing EPFR Global data, BofA said money market funds attracted $27.5 billion in inflows for the week ending August 14.
This was complemented by the 17th consecutive week of inflows into equity funds, which garnered $11.5 billion. Bonds saw $6.4 billion in inflows, while gold and crypto attracted $400 million and $200 million, respectively.
The tech sector maintained its momentum, securing $3.9 billion in inflows, marking the seventh consecutive week of gains. European equity funds, which have struggled recently, recorded their first inflow since May, albeit a modest $100 million.
BofA strategists led by Michael Hartnett said the impact of the yen carry trade led investors to say that global monetary policy is perceived as the most “restrictive” since October 2008.
Historically, such conditions have been linked to liquidity and deleveraging events, including the dotcom crash and the Lehman Brothers collapse. This is “normally followed by strong bond returns following 6 months,” strategists note.
In terms of regional performance, U.S. equity funds led the charge with $5.5 billion in inflows, marking the seventh week of positive flows. Japan also saw a second week of inflows at $1.6 billion, while emerging market stocks attracted $1 billion for the 11th consecutive week.
Within fixed income, investment-grade bonds have seen 42 weeks of continuous inflows, totaling $3.7 billion in the most recent week. High-yield bond inflows resumed at $300 million, while bank loans faced a third week of outflows at $500 million.
Treasuries saw $3.9 billion in inflows, marking 15 consecutive weeks of positive flows, while emerging market debt witnessed its largest outflow since May, with $1 billion exiting the asset class.
By style, U.S. large-cap stocks benefited from $4 billion in inflows, while U.S. small-cap stocks suffered outflows of $1.6 billion.