What's going on the markets? Analysis of the asset flows

Updated: Jul 3

Inflows & Outflows | Equities | Bonds | Crypto | ETFs | US | Global


Equities & Bonds

Global bond funds obtained inflows in the week to June 1 after eight weeks of outflows, lifted by strong demand as fears over aggressive monetary tightening and excessive price pressures eased"

Selling short/medium term bond funds and buying high yield bond funds

Financials and technology saw the largest equity fund outflows while sectors such as healthcare, utilities and consumer staples recorded positive inflows. A risk-off towards more defensive sectors.

Not surprisingly, the energy sector outperformed all other sectors in the U.S. stock market.


ETFs

Looking at the top 10 ETF creations and redemptions of the last week, two things in particular become apparent. Firstly, there are many short-term bond ETFs on the redemption side (e.g. BIL, MINT, JPST, SHV). Secondly, investors are increasingly looking for a short position in the Nasdaq 100. Net flows of 777 millions (SQQQ*) vs. -1872 millions (QQQ*).


*SQQQ provides (-3x) inverse exposure to a modified market-cap-weighted index of 100 of the largest non-financial firms listed on the NASDAQ.

*QQQ tracks a modified-market-cap-weighted index of 100 NASDAQ-listed stocks.

Foreign direct investment (FDI) equity inflows by sector

The computer software & hardware, services and automobile sectors saw the largest FDI equity inflows this year.

“Among the key sectors, the sharpest increase in inflows (YoY) in FY22 was in the automobile sector, which saw record high inflows ($ 7 bn). On the other hand computer software & hardware (by 45%) and construction (by 59%) witnessed notable decline in inflows from a year ago."

Strong equity outflows in Asia


Crypto

Increased outflows have been observed in the recent past but there is no clear trend in the cryptocurrency market on an aggregate level. Asset specific inflows and outflows are more interesting.

“On the asset-specific front, now Bitcoin saw inflows of $69 million, bringing year-to-date inflows to $369 million. This comes soon after a heavy outflow of close to $154 million in the previous week for the top-traded cryptocurrency"
“On the altcoin front, all major assets barring Ethereum clocked positive flows for the week. While Algorand saw record inflows of $20 million, Ethereum’s weekly flows were in the red at $11.6 million and recorded net year-to-date outflows of $250 million."


ARK Innovation Hype

Despite a YTD performance of -51% and an ongoing tech sell-off, the ARK Innovation ETF is in strong demand.

“ARK Invests flagship fund saw $658 million in net inflows in May, bringing the year-to-date net inflows to $1.5 billion. The fund finished the month with $9.1 billion in assets under management."


ESG

“There’s no way to know for certain why the outflows were so extreme,” said Bloomberg Intelligence analyst James Seyffart, who noted that the funds had started from a high-asset base after years of inflows. “But also ESG ETFs may be finding that people care a lot more about them in bull markets.”

Sources:

https://www.yardeni.com/pub/ecoindiciwk.pdf

https://www.reuters.com/markets/us/global-markets-flows-graphic-2022-06-03/

https://www.etf.com/etfanalytics/etf-fund-flows-tool

https://www.edelweiss.in/insight/chart-of-the-day-2/fdi-equity-inflows-concentrated-in-select-sectors-4e047b

https://www.reuters.com/markets/deals/foreigners-pull-out-asian-equities-fifth-straight-month-may-2022-06-02/

https://thenationview.com/cryptocurrency/43979.html

https://www.iqstock.news/n/investors-flock-arkk-fund-sees-658-million-inflows-3998634/

https://seekingalpha.com/article/4515624-3-reasons-why-high-yield-will-likely-keep-pummeling-arkk

https://www.coindesk.com/markets/2022/04/19/crypto-funds-see-outflows-as-bitcoin-gets-more-interest-rate-sensitive/

https://www.bloomberg.com/news/articles/2022-06-01/esg-equity-funds-had-worst-month-of-outflows-on-record-in-may

https://simplywall.st/markets/us














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