Market Extra: The rotation is for real, January fund flows confirm

This post was originally published on this site

Investors continued to favor value-oriented sectors of the U.S. economy in January, confirming a rotation that had moved in fits and starts in prior months.

A report prepared by Refinitiv Lipper for MarketWatch shows the strongest flows into exchange-traded funds with exposure to financial services, small-cap stocks, and emerging markets. The strongest outflows, meanwhile, came from the biggest winners of the past year or so: S&P 500 index SPX, +0.39% funds, large-cap growth funds, and high-yield bond funds.

Financial-services $6.68 billion
Small-cap core $5.76 billion
Core bond $5.49 billion
Emerging markets $5.34 billion
Alternative energy $4.02 billion
Science & technology $3.75 billion
Inflation-protected bond $3.69 billion
General bond $3.67 billion
International multi-cap core $3.17 billion
International large-cap value $3.15 billion
Source: Refinitiv Lipper

In addition to looking to previously underloved segments of the market, investors are starting to prepare for other conditions that are normal during this stage of the business cycle, noted Tom Roseen, head of research services for Refinitiv Lipper.

“People are at least paying attention to inflation,” he said. Inflation-protected bond funds were among the top ten biggest category gainers, picking up $3.69 billion.

What’s a bit more puzzling, amid an ongoing bond sell-off that sent the benchmark U.S. 10-year Treasury note yield up nearly 20 basis points during the month, is that general bond funds were also among the big winners in January.

Read next: These are the ETFs to help you prepare for a Biden presidency