Signs of growth bets in the fund flows

August 23, 2013

Just as Germany helps to embolden hopes for a robust recovery in Europe, a look at detailed fund flows data offers more cheer to the optimists.

I’ve been seeing which equity fund sectors saw the greatest net inflows during July, and then filtering the top 20 by flows relative to the sector’s total assets. There’s a clear winner.

According to estimates from Lipper, funds and ETFs in the cyclical consumer goods and services category notched up net inflows of about $1.5 billion, the equivalent of 7.8% of overall assets under management and the largest monthly net inflow for at least ten years. Over the 3 months to end-July, net inflows were at close to $3.4 billion.

In theory, these 300+ funds are global in scope, but it’s probably fair to say this looks mostly like a bet on the U.S. consumer; 11 of the top 20 funds by assets in the category are domiciled there. Recent data has given encouragement to investors, although there are doubts about just how robust sentiment is.

It might be a blunt tool, but if we make an assumption that bets on individual industry sectors can represent a play on resilient growth, then there is further evidence to be considered. In total, seven industry sector fund categories make into that top 20 group by net inflows in July. Banks and financials saw inflows equivalent to 4.64% of latest assets under management; pharma and healthcare 2.20%; IT 1.90%; gold and precious metals 1.67%; utilities 1.27% and natural resources 0.65%.

You can see the full table of the top 20 by inflows in the graphic below

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