Another interesting story on the equity flows side was the resurgence of dividend-oriented ETPS, which had experienced outflows in the build-up to the fiscal cliff last month.  With tax uncertainty no longer a barrier, dividend products staged a comeback in January, gathering $2.9bn.

Risk was also a trend within fixed income, where investors favored high yield bonds to the tune of $0.8bn in inflows.  In contrast, the ‘safe haven’ Treasuries category posted outflows for the second month in a row amid concerns that improvements in the US economy could put upward pressure on yields.

Will this risk-on behavior continue?  January market activity has certainly prompted some analysts to believe we’ve entered a period of “Great Rotation” from bonds into stocks.

However, Russ Koesterich believes – and I’m inclined to agree with him – that while we are seeing some investors rediscover equities, the reality is that it may take a while to see the massive shift that some are anticipating.  Rather than one smooth movement, it’s likely to be more of a grudging, volatile process.  Meanwhile, we do still advocate a long-term positive view of equities (you can get Russ’s most recent investment outlook here).

Dodd Kittsley, CFA, is the Head of Global ETP Market Trends Research for BlackRock.