LONDON Bond funds saw almost $8 billion of inflows over the last week, data showed, the biggest pouring in of cash in three months and the latest sign that the trades piled on after the U.S. election may have at least stalled for now.
Figures from Bank of America Merrill Lynch (BAML), which track flows through to Wednesday, showed equity funds had seen a similar inflow as bonds, while gold funds are now on their worst run in three years after a ninth straight week of outflows.
Emerging market funds eked out their first positive week in four and the bounceback in bonds means $17 billion has come back over the last three weeks. That's roughly 40 percent of the $42 billion that poured out in the aftermath of Donald Trump's election win.
"According to private clients, sentiment is positive, but far from euphoric," BAML's analysts added.
The bond highlights included the largest inflow in three months into investment grade bonds at $3.8 billion, a fifth week of moves into Treasury and government debt funds and a seventh straight inflow for high yield funds.
Japan secured the equity top spot meanwhile with a $3.1 billion inflow - its largest in nine weeks. U.S. stocks funds saw a minor $0.3 billion drop out, while a $0.6 billion gain by emerging markets was their third in the last eight weeks.
BAML said $2.1 trillion of assets under management were 59 percent in equities, 23 percent in debt, 12 percent in cash and 5 percent other assets.
Equity sector allocation relative to the S&P 500 showed the biggest overweight in staples (+2.6 percentage points). Private clients remained broadly overweight on utilities and telecoms firms but not yet on financials and the biggest underweight was technology focused funds at -3.8pp.
"By sector (there have been) 16 straight weeks of financials inflows ($0.9bln); 2 straight weeks of inflows to Real Estate Investment Trusts ($0.8bn) and the first inflows to healthcare in 7 weeks ($0.6bn)," BAML added.
(Editing by Susan Thomas)