What Are April's Fund Flows Saying About The Market?

Every month, Credit Suisse takes a look at Morningstar fund flow data to measure the temperature of the market. April’s data was market by “severe outflows” in U.S. equities.

Credit Suisse also notes outflows in international funds as well. Where is all this money going?

“The Morningstar data point to a rotation out of US equities and into bonds,” analyst Lori Calvasina explains. “Within bond funds, high yield inflows fell significantly last month after reaching past highs in March.”

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The iShares iBoxx $ High Yid Corp Bond (ETF) HYG is up 3 percent so far this year.

In addition, Calvasina notes funds continue to flow away from growth stocks in 2016. The First Trust IPOX-100 Index Fund (ETF) FPX is down 1.1 percent in 2016.

In terms of sector equity funds flows, top 2015 sectors, including Healthcare, Consumer Discretionary and Tech, have witnessed deep outflows so far in 2016. Instead, Utilities, Real Estate and Consumer Staples, which were all relatively weak in 2015, have been among the strongest sectors so far in 2016.

Inflows into the Energy sector have been persistent since August of 2015.

Consumer Discretionary and Consumer Staples flows turned negative in April.

So far this year, the top-performing Sector SPDR ETF has been the Utilities SPDR (ETF) XLU, up 12.6 percent. The worst-performing Sector ETF has been the Health Care SPDR (ETF) XLV, which is down 2.8 percent.

Disclosure: the author holds no position in the stocks mentioned.