INVESTORS STILL FLOCK TO CASH AS STOCKS HIT RECORD HIGHS
Investors have been pouring money into money market funds at an unprecedented rate in the early weeks of this year, according to Bank of America Global Research. Additionally, there was an inflow of $15 billion into equities in the week leading up to Wednesday. This indicates that the rally in the equity market is expanding beyond large-cap companies, with U.S. small-cap funds experiencing their largest weekly inflow since June 2022, amounting to $5.1 billion.
BofA's weekly roundup, based on EPFR data, highlights that cash flows have been running at an annualized rate of $1.3 trillion from the beginning of 2024 through to February 21. This surge in cash flows could be attributed to investors seeking safer options amidst uncertainties. However, with interest rates remaining elevated and unlikely to decrease in the immediate future, money market funds, which are considered cash-equivalent, have attracted significant inflows. Despite the record highs in the S&P 500, investors continued to allocate funds to bonds, with $15.2 billion flowing into bonds in the latest week. This includes $10.2 billion into investment-grade bond funds, marking the 16th consecutive week of inflows, the longest streak since October 2021.
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