With another U.S. interest rate hike seemingly imminent thanks to a string of solid data releases, investors gravitated to Financial Sector Funds in early March while pulling back from Gold, Utilities, Telecoms and Consumer Goods Sector Funds. But the prospect of higher interest rates did not stop Real Estate Sector Funds from recording their biggest inflow in nearly two months as they extended their longest inflow streak since late 3Q16.
The week ending March 8 also saw investors assessing the plan developed by Republican Congressional leaders to overhaul the U.S. healthcare system, once again, while rolling back many of the reforms introduced by the previous administration. Healthcare/Biotechnology Sector Funds did post modest inflows for the week even though redemptions from pure Biotechnology Funds hit a seven-week high as new President Donald Trump continues to publicly criticize drug prices.
Over $1 billion flowed into U.S. Financial Sector Funds for the second time in the past four weeks, with investors penciling in greater pricing power and fewer regulations for the sector as the Fed tightens and Trump wages war on red tape.
Energy Sector Funds also absorbed fresh money despite evidence that supply is still more than meeting demand. Energy MLP Funds, which are tied to U.S. mid-stream assets and have benefited from the new U.S. administrations’ promises to focus on infrastructure, attracted only a quarter of the previous week’s inflows.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.