Institutional Insights: Deutsche Bank, Investor Flows & Positioning
Grinding Higher On Robust Inflows
After jumping sharply following the US presidential election, our measure of aggregate equity positioning has gone largely sideways over the last three weeks, clearly well above average but not extreme (z score 0.75, 90th percentile). Discretionary investor positioning has pulled back some after thepost-election surge but remains elevated (z score 0.78, 90th percentile), while systematic strategies positioning has continued to grind higher and isnow at its highest since just before the pandemic (z score 0.90, 90th percentile).
Across sectors, positioning in MCG & Tech is elevated while the gap between cyclicals and defensives has closed, both a little above average. Within the cyclicals, positioning in Financials is elevated, that in Consumer and Industrial Cyclicals above average and climbing, in Energy near average, but that in Materials has continued to remain below. Positioning in small capsis near the top of its historical band. Across the defensives, positioning in Staples is elevated but falling, that in Utilities and Real Estate has fallen back to the middle of their ranges while in Healthcare it remains well below average.
Even as positioning has gone sideways,equity funds have continued to seerobust inflows. After four huge weeks ($140bn in total), equity inflowsslowed this week but remain quite strong at $8bn, in line with the prior ytdaverage. As we noted last week in our outlook for 2025, we expect inflowsnext year to remain robust, a key driver of potential upside along withbuybacks, while positioning is unlikely to be a meaningful contributor fromcurrent elevated levels. Across regions, the US ($8bn) received the bulk of inflows this week again,and global mandate funds also saw some ($4.5bn), as did EM ($0.5bn) butEurope (-$5.1bn) saw heavy outflows, their worst in 2 months. Bond fundinflows slowed to the weakest in 3 weeks ($4.9bn), as government bondfunds (-$4.4bn) saw heavy outflows, their worst in a year. Other categoriesfared better, especially IG ($3.8bn) which saw its strongest inflows in 7weeks.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!