Tag Archives: stocks

Lipper U.S. Weekly Fund Flows: A Tale Of 2 Cities

By Tom Roseen During the fund-flows week ended January 27, 2016, markets continued their wild swings upon hearing conflicting market and economic news throughout the week. On Thursday, January 21, U.S. stocks got a shot in the arm, fueled by a rally in oil prices, despite news that crude inventories had risen the prior week, that weekly initial jobless claims had risen to their highest level since July, and that the Philadelphia Federal Reserve Bank’s manufacturing index remained in negative territory for the fifth month in a row. Hints of more stimuli by the European Central Bank and news that China’s central bank had injected more cash into the country’s financial system helped markets gain some footing. On Friday all three major U.S. indices posted their first week of plus-side returns for 2016 after oil prices rose to their highest levels in nearly two weeks and after a report showed that North American oil rigs’ output had declined slightly. Market participants cheered news that preliminary readings of the purchasing managers’ index were on the rise and that December existing-home sales rose a whopping 14.7%. Unfortunately, another major rout in oil prices weighed heavily on the markets on the following Monday, sending the Dow Jones Industrial Average down by triple digits as investors began to look for clues on the Fed’s outlook after the FOMC meeting adjourned on Wednesday. Nonetheless, U.S. markets rose once again after witnessing another rebound in oil prices and after learning about strong earnings reports from bellwether firms Sprint (NYSE: S ), P&G (NYSE: PG ), and 3M (NYSE: MMM ). The U.S. market shrugged off another round of large declines in China’s Shanghai Composite and cheered news that November U.S. home prices rose at their fastest pace in 16 months and that January’s consumer confidence index beat expectations. Despite the Fed leaving rates unchanged after its January FOMC meeting, some investors worried that it had left the door open for a March interest rate increase, even though it acknowledged that economic growth had slowed. That led the U.S. markets to suffer yet another round of declines on Wednesday. A rise in oil and news that new home sales had rebounded in December weren’t enough to push the markets higher. While investors were net purchasers of fund assets (including those of conventional funds and exchange-traded funds [ETFs]), injecting a net $16.6 billion for the fund-flows week ended January 27, the headline numbers were a little misleading. As might be expected, given the recent volatility, investors turned their backs on equity funds, redeeming $1.2 billion net for the week, but they padded the coffers of money market funds (+$13.9 billion), taxable bond funds (+$3.3 billion), and municipal bond funds (+$0.6 billion). For the first week in four equity ETFs witnessed net inflows, taking in $3.9 billion. Despite concerns over the FOMC announcement, authorized participants (APs) were net purchasers of domestic equity ETFs (+$3.8 billion), injecting money into that group also for the first week in four. They also padded-for the first week in three-the coffers of nondomestic equity ETFs (but only to the tune of +$107 million). Perhaps as a result of the strengthening oil prices and better-than-expected earnings news from stalwart U.S. firms, APs turned their attention to some big-name ETFs, with the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) (+$3.5 billion), the iShares Russell 2000 ETF (NYSEARCA: IWM ) (+$2.7 billion), and the iShares MSCI Japan ETF (NYSEARCA: EWJ ) (+$0.7 billion) attracting the largest amounts of net new money of all individual equity ETFs. At the other end of the spectrum the iShares Russell 1000 Growth ETF (NYSEARCA: IWF ) (-$0.7 billion) experienced the largest net redemptions, while the iShares MSCI Emerging Markets ETF (NYSEARCA: EEM ) (-$0.5 billion) suffered the second largest redemptions for the week. For the seventh week in a row APs padded the coffers of government/Treasury funds, injecting $3.7 billion for the week, their largest net inflows since February 4, 2015. Once again, in contrast to equity ETF investors, for the fourth week in a row conventional fund (ex-ETF) investors were net redeemers of equity funds, redeeming $5.1 billion from the group. Domestic equity funds, handing back $4.9 billion, witnessed their twelfth consecutive week of net outflows, despite posting a weekly return of 1.35%. Meanwhile, their nondomestic equity fund counterparts witnessed $0.2 billion of net outflows-suffering net redemptions for the first week in three. On the domestic side investors lightened up on large-cap funds and equity income funds, redeeming a net $2.3 billion and $1.0 billion, respectively, for the week. On the nondomestic side global equity funds witnessed $1.2 billion of net outflows, while international equity funds attracted some $1.0 billion. For the twelfth consecutive week taxable bond funds (ex-ETFs) witnessed net outflows, handing back a little over $2.6 billion for the week. Corporate investment-grade debt funds suffered the largest redemptions for the week, witnessing net outflows of $2.1 billion (for their tenth consecutive week of net redemptions), while corporate high-yield funds witnessed the second largest net redemptions (-$0.7 million). Despite the Fed’s leaving the door open for a March rate hike, bank rate funds-handing back some $0.7 billion for the week-experienced their twenty-seventh consecutive week of net outflows. In a flight to safety investors injected net new money into government mortgage funds (+$0.6 billion), government/Treasury and mortgage funds (+$0.4 billion), and government/Treasury funds (+$0.1 billion) for the week. For the seventeenth week in a row municipal bond funds (ex-ETFs) witnessed net inflows, taking in $502 million this past week.

Tactical Asset Allocation – February 2016 Update

Here is the tactical asset allocation update for February 2016. As I mentioned last month, I am now using a new data source for the portfolio updates. I am also maintaining the old portfolio formats, in Yahoo Finance, for a while. Here is the link to the Yahoo data. Let’s dive right in. Below are the updates for the AGG3, AGG6, and GTAA13 portfolios. The source data can be found here . The big change here is the use of FINVIZ data and more importantly that these signals are valid after every trading day. So, while I’ll maintain these month end updates, this means that you can implement your portfolio changes on any day of the month, not just month end. FINVIZ will at times generate signals that are slightly different than Yahoo Finance. Click to enlarge AGG3 is now 100% bonds and no cash. This is a significant change from last month where AGG3 was 66% invested. AGG6 is 33.3% cash and 66.6% bonds. AGG6 is more invested than last month’s positions. Below is the YTD performance along with some popular benchmarks. Once change in the performance figures this year is that I am know including the performance of cash when the portfolio sin cash (using SHY as the cash proxy). For the Antonacci dual momentum GEM and GBM portfolios, GEM is now in bonds, BND, and the bond portion of GBM is in cash. I’ve also made my Antonacci tracking sheet shareable so you can see the portfolio details for yourself. Here is the data. Click to enlarge Finally, I am receiving quite a bit of interest in the simple bond quant model I published previously . So, I created a spreadsheet to track one version of the model I presented. The spreadsheet ranks the bond ETFs by 6 month return and uses the absolute 6 month return as a cash filter to be invested or not. Several versions of this model work quite well as discussed in the blog post. Personally, I am now using a 3 month return, 3 month filter, top 3 model but the differences are not that big. That’s it for this month. These portfolios signals are valid for the whole month of February. As always, post any questions you have in the comments. **Note: an observation for this week. Ever notice the percentage of self-called ‘long term investors’ who know what the stock market did on a daily basis? Let me tell you that is long term detrimental to your portfolio performance. It is hard to ignore market data in today’s world. I try very hard to ignore it and have to take active action to avoid finding out about daily gyrations in the market. It’s one of the reasons I do not blog more often. My goal is to only check one per month, that’s it. And even that is too often. If I could auto trade my quant systems I would… I once heard it said that most investors would achieve higher returns if they lost their password to their investment accounts for years. There is a lot of truth in that statement….