With domestic equities ending Q2 at all-time highs- and a few global indices not far behind- I thought it would be interesting to look at where funds were allocated over the quarter. Although examining money flows give no indication where markets are going, they do offer interesting insight as to where money was being put to work, and where that working money was being made available. Let’s take a look at some of the developments we saw over the most recent record breaking quarter.
- The only asset classes that saw outflows in Q2 were commodities and currencies.
- Spain (EWP) saw the biggest inflow of any iShares country ETF, with 58% of the AUM coming in the last quarter alone. As is often the case, these inflows came on the heels of a nearly 20% gain seen over the prior 2 quarters.
- After rising 26% in Q2, India (INDA), saw a $516M inflow. This was the third largest country inflow.
- Asia Pacific was the only region that saw equity outflows. China, which continues to lag (+2% YTD) saw the biggest out flow of any iShares country ETF.
- Emerging market equities had higher inflows than European equities which is interesting considering Europe is several times larger than EM.
- IJH (mid-caps) experienced the highest inflow of any developed market equity while IWM (small caps) had the largest outflow of any developed market equity, pretty interesting.
- Of any domestic sector, energy saw the biggest inflow by a wide margin, which is hardly surprising considering the under performance over the past few years coupled with the huge out performance in Q2. Industrials and utilities also saw substantial inflows.
- Consumer discretionary had the most outflows of any domestic sector (for a second straight quarter) followed by financials, health care and technology.
Again, watching flows only tells us where money went, which is usually towards hot asset classes and sectors and away from the poor ones. What is really interesting to keep an eye on is when these trends start to change.