Key insights
- BofA reports positive equity inflows in April driven by hopes for a US-Iran peace deal and tax-related outflows from money market funds. They forecast two rate cuts in September and October, supporting front-end yields and potential rotation into short-duration bonds. US equities saw the largest inflows, with fixed income concentrated in US Treasuries and global bonds. Active equity managers continue to underperform, with passive equity gaining market share.
Investing.com -- Bank of America reported that equity flows turned positive in April while money market funds experienced outflows, driven by hopes for a US-Iran peace deal and seasonal tax-related withdrawals.
Active equity flows were flat last month while passive equity inflows declined substantially. Bond flows weakened and money market flows turned negative, according to BofA’s monthly analysis of data from Simfund, Morningstar, Lipper, and ICI.
In April, equity inflows improved despite seasonal headwinds from tax-season outflows, with fixed income inflows also strengthening month-over-month. Money market flows remained negative month-to-date due to tax seasonality.
BofA economists now forecast two 25 basis point rate cuts in September and October, delayed from their previous June and July projection. This supports higher front-end yields and could encourage rotations from money market funds into short-duration bond funds.
The bank identified positive net flow results from BlackRock (NYSE:BLK), Fidelity, Invesco (NYSE:IVZ), JPMorgan (NYSE:JPM), Lazard (NYSE:LAZ), PIMCO, Charles Schwab (NYSE:SCHW), Vanguard, Voya Financial (NYSE:VOYA) and Wilmington Trust, primarily due to their fixed income, passive equity, ETF and money market fund businesses.
BofA rates BlackRock at Buy, noting the company has outperformed during other volatile periods. The bank also rates Affiliated Managers Group (NYSE:AMG) at Buy due to momentum at AQR.
Within equities, US equities experienced the largest net inflows last month. In fixed income, inflows were concentrated in US Treasuries and global bonds.
Active equity managers beating their three-year benchmarks remained flat year-over-year at 27% versus 25%. Active equity now represents 26% of long-term industry assets under management, down from 41% in 2010, while passive equity has grown to 38% from 14%.
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