Wealthy private bank clients have reduced their cash holdings to a record low and flows into active funds have increased, according to research from Bank of America Merrill Lynch (BoAML).
The bank, which this week noted that fund managers continued to have relatively high cash holdings, said that wealthy clients had in fact lowered their cash allocations to a record low of 10.4% – below the average of about 13% since 2005.
Active funds were making a “comeback”, the bank added, because in the five days to July 19, these funds had seen their largest inflows ($3.5 billion/€3.03 billion) in two-and-a-half years.
In its ‘Flow show’ report, BoAML described the environment around these factors, including large inflows into corporate bond funds, as “risk-on”.
There were $9.9 billion of flows into equity funds overall during the five days, the majority still being into ETFs. A net $10.7 billion flowed into bond funds, mainly corporate bonds.
Fund flow data for BoAML’s report was sourced from EPFR Global.
The ‘Flow show’ authors, Michael Hartnett, chief investment strategist, and Jared Woodard, investment strategist, wrote: “Our BofAML Bull & Bear Indicator is now at 7.4 (near Jul’14 highs and not far from “sell” signal). But stay long risk assets until sentiment reaches euphoric territory of 8.0.”
©2017 funds europe
