Equities flows were the leader this week, but it was one of the smaller inflows weeks since the election. Even though the flows were light overall, there was lots of movement in the peer and sector groups. With vaccines being distributed last week, investors seemed to think a broad based approach was the way to go. The broad based approach was seen in US, Emerging Markets, and Developed Markets.
The technology sector was hit hard this week. Large cap also felt the outflows this week(huge outflows on Friday), the biggest since the election. Also feeling the pain this week was corporate and high yield fixed income ETFs. High yield has had strong flows the 2 weeks prior with investors looking for yield.
Within the US sector, tech ETFs and health care ETFs were on the wrong side of flows. Again the outflows from technology funds was massive. This past week almost wiped out the year to date flows in tech.
The flows also went truly global this week. There has actually a good amount of flows going into these ETFs for the last month, but the US still had been be the leader overall. That changed last week. Even though emerging markets had strong flows, the majority of these flows went into developed markets. This seems to be a search for better valuations than the US markets, which are still near all time highs.
Looking at investments by theme shows once again that the ESG trade is not going anywhere. It really is staggering how ESG has dominated the flows by theme on the year.
With the vaccine being rolled out nationwide, it will be interesting where flows go this week. US equities overall are at super high valuations and Brexit didn't seem deter flows into the Eurozone last week. Will that continue with a broad based approach or will investors narrow in on those sectors and regions that seem like a good value. The last 2 weeks of the year have been good to the US markets historically.
I hope you have a great week and take care.
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