Of all the asset classes, bonds recorded the highest level of global investor inflows last week, generating $13.3bn for the seventh consecutive week.
Equities, by comparison, brought in under half that amount ($6.3bn) and inflows were driven almost exclusively by ETF products.
In particular, BAML’s fund flow findings highlighted investors’ predilection for risk-on bonds, as yields slipped.
Investment grade bonds were the most popular option for investors, accumulating $7.6bn in flows, the biggest gain since last August.
Emerging Market debt continued to find favour with investors, after a brief hiatus post-US election, generating inflows for five out of the past six weeks ($2.5bn).
In fact, Trump’s “economic nationalism” thus far dollar-negative not dollar-positive has made EM the contrarian Q1 winner,” BAML reported.
“EM stocks and bonds have seen $11bn inflows YTD as investors start chasing this cyclical laggard.”
High-yield funds also ended the week on a positive note, as did TIPS, with $1.9bn and $1bn in positive flows. The latter has not seen such strong levels of capital commitment since Donald Trump snagged the US presidential contest.
Conversely, lower US treasury yields drove investors away from the traditionally safe asset class, resulting in $0.9bn worth of redemptions, its biggest outflows year-to-date.
Fund flow data this week continued to reflect “no fatigue in the leadership of the reflation rally,” the investment bank added.
Inflation-on value stocks remained the most attractive options, particularly in Europe and Japan. Unlike US equities, which lost $1.6bn, Japanese equities racked up a whopping $3.4bn, its largest week of inflows since the US election.
