Global equity funds received $21 billion in the past week — their ninth-biggest inflow ever — as investors embraced the 'Trump trade,' while money flowed out of bonds for seventh week in a row, Bank of America/Merrill Lynch (BAML) said on Friday.
The BAML figures, which track flows through Wednesday, showed overall equity inflows of $63 billion since Donald Trump's U.S. presidential election win on Nov. 8, partially reversing the $151 billion outflows seen from January to October.
The bulk of the latest gains came from an $18.5 billion rush into U.S. stocks, but European and emerging equity funds also saw inflows of $700 million and $1 billion respectively, the data showed.
"Forced buying means the risk rally is broadening; (there are) rising inflows to laggards," analysts at the bank added.
Materials, financial, energy and industrial firms have seen the biggest boost since Trump's victory, with ETF holdings of materials assets up 25 percent and more than a fifth for financials.
Bond funds, however, saw a $4.4 billion exodus for their longest losing streak in three years, while gold lost $700 million. Emerging debt funds lost $1.2 billion for their sixth week of outflows.
But in line with the enthusiasm for reflation trades, almost $5 billion moved into riskier high-yield bonds — the most in nine months — while inflation-linked securities, TIPs, received $300 million for their 25th week of inflow out of 27.
BAML said there were still 'winter risk' worries about a potential sharp fall in China's currency and another spell of outflows from the world's second-largest economy. The yuan has hit 8-1/2-year lows to the dollar while local bond yields have spiked this week.
"Risks of sharper devaluation of China currency plus trade and geopolitical tensions with the United States are keeping clients long U.S. and Japan, short Europe & emerging markets and preventing 'full capitulation' into risk assets," BAML added.