“Our contacts in the industry tell us that these inflows are ‘smooth’ and not the result of a few chunky reallocations of capital by a handful of accounts. In short, that $12 billion in new money is a decent indicator of investor interest in U.S. stocks,” Colas remarked.
“Even U.S. fixed income is seeing a resurgence of interest in these first few days of the new quarter,” the strategist added.
Investors have directed $2.7 billion to this ETF segment in July. [Investors Jumping Back Into Junk Bond ETFs]
“Yes, the winners here are shorter duration products, as you would expect given the volatility in the longer end of the curve. At the same time, asset classes such as high yield corporates are back to receiving inflows,” Colas said. [Investors Buying High-Yield ETFs with Shorter Durations for Rate Protection]
Conversely, ETFs seeing outflows this month include funds tracking gold, real estate investment trusts, emerging markets, preferred shares and consumer staples stocks.
“The bottom line from this data is that investor interest is squarely focused on U.S. investments generally and domestic equities specifically,” Colas said. “Former objects of attention – emerging markets, commodities, yield plays and the like – have fallen by the wayside. This is an all-American love affair, at least for now.”