All Taxable Bonds saw total positive inflows of $4.2 billion, or (+0.4%) of assets. Ranking inflows YTD as a percentage of assets, EM Debt is first with $12.5 billion followed by Bank Loans with $11.2 billion and Global Debt $43.5 billion. Money markets
saw positive inflows of $17.3 billion, or (+0.7%) of assets. Equities saw $5.2 billion in positive inflows, or (+0.2%). Money Markets have seen the greatest net outflows YTD of $437 billion, or (-13.6%) of assets.
The money flow into risk is somewhat disconcerting. The reach for yield is obvious in the fund flow tables as well as the focus on dividend producing equities. While rates are low (and will, most likely, stay this way for some time) the increase in risk appetite to feed the yield beast rarely, if ever, works out longer term. That said, flow (momentum) is on the side of risk, so catch a wave, ride returns, keep an eye on the risk trade and use stops.
I was talking with some sell-side friends yesterday and they mentioned that the demand for high yield continues unabated - deals are massively oversubscribed, allocations are severe and covenants getting light. Don't like it, but have to buy the trade. HYB for at least a 5% allocation continues to be warranted.
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