Equity Investing Booms Again

Investors pumped a fresh $21 billion in global equity funds and another $11 billion into bond funds in the week ending April 26, with ETF assets under management now touching the $4 trillion market as the broad rotation from active to passive continues, EPFR Global says. None of the actively managed sub-groups by style and capitalization managed to record inflows for the week, while mid cap value ETFs (MDYV 73,07 +0,12 +0,16%) were the only ETF sub-group to experience net outflows. Managers of U.S. equity funds (XLE 83,31 -1,30 -1,54%), meanwhile, seem to be pulling back from energy stocks despite the recent improvement in the sector’s earnings, based on EPFR Global data. The average fund allocation to energy plays is currently at its lowest level in over seven years. On the sector side, flows into industrial (XLI 111,30 +0,14 +0,13%) and financial sector funds (VFH 92,40 +1,55 +1,71%) climbed to seven and 10 week highs while gold funds (GLD 187,93 +0,56 +0,30%) posted their biggest outflow this year this week. The newly proposed Trump tax plan’s emphasis on cuts, rather than reform and revenue neutrality, made it easy for investors to translate its impact into higher borrowing costs. That capped the recent run of inflows recorded by utilities sector funds (XLU 60,98 -0,08 -0,13%) and weighed on real estate funds (IYR 88,24 -0,10 -0,11%). Both of those sectors are also under pressure from speculation that the Fed will start trimming its mortgage-backed bond holdings later this year. EPFR also noted on Friday that the best bond fund categories for the week were intermediate blended bond funds and long term government bonds (IEF 94,94 +0,01 +0,01%). Mortgage backed (MBB 91,67 -0,06 -0,07%) and inflation protected bonds (TIP 106,32 -0,07 -0,07%) both saw outflows in the week ending on Wednesday. The tickers seen here were not mentioned by EPFR Global and are for illustration only.