May 2024 fund flows: Money rotates back into the US
US indices have defied gravity so far in 2024, and this may continue from a fund flow perspective. Dewi John, Lipper’s Head of UK Research, joins IGTV’s Angeline Ong to explain the rotation underway from the UK funds into the US.
John also says there’s evidence investors are rotating from passive to managed funds, as we head into H2.
(Partial Video Transcript)
Discussing H1 outlook
Angeline Ong: Hello, I'm Angeline Ong and this is IGs “Trading the markets”. So, Wall Street indices have been rallying, further defying gravity. Joining me now is Dewi John, Lipper’s head of UK Research. Such a pleasure to have you on set with me. I guess the key thing is, you know, our clients love US equities and you obviously cover fund flows. What has the last half told us and what is it pointing to in this coming half?
Dewi John: Well, we're not quite at the end of the half. I could make a lot of money if I knew what was going to happen by the end of H1. But the year so far has been something of a continuation of '23. And in terms of equities, what people are buying in the fund world, they're buying, first of all, diversified global equity funds, which are majority blue chip dominators, and they're 60%, broadly speaking, along the index exposed to the US.
Discussing the US
The next is the US. Now, if you go back two or three years, the US wasn't a heavy seller, so that's really come up and it's obviously ridden on the coattails of Mag Seven, and we saw a little bit of a hesitancy around what was driving that market towards the end of last year when you could see an ETF world, equally-weighted S&P 500 and similar index funds starting to come up along the top sellers alongside cap weighted. That hasn't really appeared at all this year. They've receded. So, it seems that what's happening is investors are more comfortable with the earnings potential of of these big IRA-driven stocks.
Watch the full video for the full anlysis and day's trading updates
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