I love Thanksgiving, it's full of dishes that I do only once a year. The kitchen is a constant tornado until serving time and really the rest of the day. As people eat, snack, sleep, snack, sleep, and then have some pie. This year is going to be much smaller at my house, but the good times will be the same. On to the flows, last week equities still had a monster week of inflows, but it was very back and forth week with large out flows on Monday and Friday. Fixed Income had it's largest inflow since the election.
Gold and treasury once again had large outflows on the week. Large cap also had another week of outflows. Tuesday was also the day all the 3X leverage funds in equities were cleared out, signaling that the post election run of equities/large cap may be coming to an end for the institutional side. The flows from Gold and treasury funds could be the retail side coming off the sidelines.
So where were those flows going? It seems for the 2nd week in a row that investors were spreading their risk around. With small cap and value funds seeing significant inflows. This also showed up in funds outside of the US. Asset allocation and rebalancing adjustments seemed to be the trades of the week.
As I mentioned last week, as value flows have picked, so have the dividend paying sectors. Industrials, Financials, and Basic Materials had big flows, especially compared to year to date flows.
Another week, another domination of ESG flows by investment theme. It will be interesting to see what happens with infrastructure and homebuilding. Both of these themes are great economic multipliers, obviously infrastructure will be harder.
I had hoped last week would confirm a couple of things for me. In some sense it did. With leveraged funds seeing a pull back, I believe that the post election large cap risk on splurge is over. That doesn't mean that equities are doomed from here, but the last 2 weeks has had the ETF world spread risk more evenly across sectors and globally. With Thanksgiving this week, the flows could be light, but the shopping numbers will be watched closely by all.
I hope you have a Great and Safe Thanksgiving!
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