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Figures from Bank of America Merrill Lynch (BAML), which track
flows through to Wednesday, showed inflation-sensitive TIPS U.S.
government bond funds notched their 31st inflow of past 33
weeks.
The money that joined all bond funds amounted to $8.6 billion.
Japanese equity funds brought their cumulative three-week
inflows to $8.8 billion and the highest in 16 months, while
materials funds scored their 11th positive week in the past 12.
"Bottom line: investors continue to position for reflation via
TIPS over munis, HY (high-yield) over gold & Japan over U.S.
equities," BAML's analysts said.
"But the repositioning feels grudging and flows have yet to show
big asset allocation capitulation out of bonds into stocks."
BAML's view is an 'Icarus trade' where there is "one last
melt-up in risky assets" before the ground rushes up.
The weekly data showed world equities saw a tiny $0.2 billion of
net inflows.
A total of $1 billion went into EM equity funds, though, their
best week in three months. U.S. stocks were the main losers,
with 6.3 billion of outflows which was their largest in four
months.
But the data would not have captured the surge since Wednesday
after the Dow Jones Industrial Average topped 20,000 points for
the first time and Wall Street's other main markets also hit
record highs.
(Reporting by Marc Jones; Editing by Catherine Evans)
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