- QE drove fund flows in 2016, but the past two months has been all about reversing this trend
- High-grade and EM debt funds have been the main beneficiaries of QE-mania
- Equities have been the biggest loser in 2016; HY funds closed the year on negative territory in terms of flows; Commodities were the biggest winner for most of 2016
- Recent developments have shifted momentum
Bank of America Merrill Lynch Research Team has published the 2016 year end Funds Flow Report. “QE drove fund flows in 2016, but the past two months has been all about reversing this trend. Even though high-grade and EM debt funds have been the main beneficiaries of QE-mania, recent developments have shifted momentum to the negative side.” They find.
Equities have been the biggest loser in 2016, with outflows mounting to $100bn, as investors flocked to QE-eligible assets. HY funds closed the year on negative territory in terms of flows, despite the recent rebound. Commodities were the biggest winner for most of 2016, but rising rates reversed the strong inflow seen over the first part of the year.
Last week of the year…
High grade funds had their first week of inflows after seven weeks of outflows, and the inflows were spread across a wide range of funds. High yield funds continued to see inflows for a fourth week, at a strong $1bn+ rate. The inflows of the last week of the year came across the board. Global, US and European-focused funds in Europe recorded strong inflows.
Government bond funds flows flipped back to positive territory after two weeks of relatively heavy outflows. Money market funds weekly flow data point to a third week of outflows, albeit marginal. Overall, fixed income funds flows flipped back to positive after seven weeks of outflows. European equity funds recorded a marginal outflow last week.