Investors stormed into riskier assets last week, pumping $27 billion into equity funds as positive Covid-19 vaccine updates led to euphoric buying of shares in worst-hit sectors such as banks, travel and leisure, and oil, BofA said. Citing data from EPFR, the bank said inflows into global stocks in the last two weeks soared to $71.4 billion, the biggest ever. The flows were led by US and emerging market stocks. Still, investors were not ready to pull the plug on high-flying technology stocks, which saw $2.4 billion inflows last week. BofA said the feedback was “we’re on it (the rotation to value stocks), but we ain’t selling tech”. Value stocks, typically companies that are more sensitive to economic cycles, have been soaring since BofA said it expected 2021 to be the “year of vaccine”, leading to outperformance of value stocks versus growth stocks, high-yield debt versus investment-grade debt, emerging markets versus S&P 500 and small cap versus large cap.
Published in The Express Tribune, November 22nd, 2020.