* Cyclical inflows hit 3-year high while Pharma suffered biggest outflows
Cyclical inflows are back to their early 2012 highs, while excitable this is only one
month and they are not yet 2 standard deviations above the mean (a typical turning
point). With lead indicators surprising to the upside and German Q4 GDP beating
expectations, Pharmaceuticals saw the biggest outflows and General Retail, Industrials
and Mining the biggest inflows. Investors also turned net buyers of Oil & Gas after
persistent net selling. Lastly, within Financials, Insurance (dubbed the safer Financial)
suffered the second-biggest outflows (next to Pharma) as clients nibbled on the Banks.
* Again, the cycle: Germany takes Switzerland's lead for most inflows
Switzerland is the most defensive market In Europe and Germany's the 2nd most cyclical
(after Sweden-fig 10). France and the Netherlands, the 3rd and 4th most cyclical core
markets were left behind in the frenzy. If we look at ETF flows, (figure 8) Germany saw
inflows of 12% of AUM versus 2% outflows for the US. Spain and Italy, preferred in
2013 and 2014, seem to have been left out as dated crisis plays.
* High Yield credit sees biggest inflows in 3 years and Hedge funds lever up
Enthusiasm moves from IG to High Yield credit with the biggest inflows in 3 years –
after a miserable 2014. Hedge funds are also gearing up – net leverage bounced back
from October lows of 30%, to 42% (long-run average) a level not seen since 2013.
* YET, Global ETFs into Europe have not seen cumulative inflows for past 3 years
If investors are worried that the big flows into Europe have happened and might be
waning – look again. Cumulative inflows are right back where they were in January
2012. Even the big flows into Europe in 2014 have all been wiped out. Global ETF
outflows in Q4/14 were close to $12bn and Q1/15 recapped only c$6bn of this