Stock Funds Get Record $44.5 Billion Inflows on Vaccine Optimism

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(Bloomberg) — Stock funds attracted a record amount in a busy week that included Joe Biden’s election victory and promising results for a coronavirus vaccine.

Equity funds added $44.5 billion in the week through Nov. 11, dominated by inflows to the U.S. of $32.5 billion, according to Bank of America Corp. and EPFR Global data. Exchange-traded funds led the additions, pulling in $38.7 billion with the rest going into mutual funds, according to a BofA note.

A study published on Monday showing that a vaccine developed by Pfizer Inc. and BioNTech SE protects most people from Covid-19 fueled global risk appetite, pushing the MSCI All-Country World Index to a record. Biden’s triumph in combination with a possibly divided Congress was also taken positively by investors who had feared higher corporate taxes and increased regulation.

© BofA

The risk-on mood fueled a rotation into value and cyclical sectors earlier this week whereas technology and other more defensive sectors led the gains in the prior week amid U.S. election uncertainty. According to BofA, U.S. large-cap stocks got a whopping $23.6 billion in the week through Nov. 11, while U.S. growth stocks saw $3.7 billion inflows compared with $2.4 billion for value.

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Among sectors, technology’s $2 billion inflow was the twelfth-largest ever, while cyclical sectors also enjoyed additions with energy seeing its biggest inflow since April 2015 and financials adding $1.3 billion, the most in six months.

Investors are “likely to barbell cyclical exposure with conservative large-cap tech plays until a vaccine arrives and with it unambiguous signs of corporate animal spirits; but the bull story of 2021 is simply a reopening rotation story,” said BofA strategists led by Michael Hartnett.

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