Weekly Flows - Post Election 2.0
I guess we are still waiting to be done with this election. The markets this week seemed to finally be reacting to Covid data going the wrong direction and much less about the election transition drama. That made for a very choppy week and ETFs would have had outflows on the week if not for equities. But instead equities inflows blew past the last 2 weeks combined.
Large outflows from treasury ETFs up and down the duration ladder this week. After being a leader last week, high yield had sizeable outflows, most of which happened on Friday. Gold ETF outflows, just like the treasury ETF outflows may signal of a real return to the risk side.
Massive inflows into large cap for the week(almost double last week), even with a sizeable withdrawal on Friday. This week also brought the return of inflows for large and small value. The first in over a year for both. This showed up in sector peer group too, with all the usual suspects in the dividend paying world.
ESG has dominated inflows by investment theme at every time interval for the past year. Post election, the inflows have been huge, but this isn't just an election trade. ESG is here to stay. The U.K. announced that they will offering Green Bonds for the first time, but the even bigger news is that they want ESG financial disclosures by 2025. This will force all companies to look at themselves through the ESG lens.
This was the biggest outflow week of the year for Homebuilding ETFs. The housing market has been hot all across the country and investors were adding positions to their portfolios for most of the year. But outflows may have suggested that investors were not rewarded with return. Homebuilding stocks have been volatile to say the least.
This week I'll be following the flows into and out of treasuries to confirm a couple of things. Is it truly investors being risk on or is it more advisors rebalancing and rotating portfolios after the election results. The flows into value this week seems like rebalancing trades to me. But investors coming from treasuries could have been part of that flow as well.
I hope you have a great week and take care.
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