In the wake of the failed effort to repeal and replace the previous administration’s health care sector, reforms investors trimmed their exposure to President Donald Trump’s reflationary promises during the fourth week of March. Infrastructure Sector Funds saw their 11-week inflow streak come to an end, redemptions from Industrial Sector Funds hit a level last seen in mid-4Q15 and Consumer Goods Sector Funds extended their longest run of redemptions YTD.
Also posting outflows were Real Estate Sector Funds, with U.S.-focused ones accounting for two-thirds of the headline number. According to Informa Financial Intelligence’s chief macro strategist, David Ader, this sector is facing some long-term demographic headwinds in the U.S. In a recent note, he observed that, “a general decline in the rate of home ownership in the U.S. should raise concerns when baby boomers start selling their homes, since they are by far the group that owns homes. One implication of this is that there will be rising inventory of homes, specifically older and aging homes, for years to come … another is that younger Americans, for a variety of reasons, aren’t in a position to upsize when these properties start hitting the market.”
Energy Sector Funds, meanwhile, ended the first quarter having recorded inflows 12 of the past 13 weeks. When filtered by geographic mandate funds with U.S., Canadian and Europe regional mandates have fared best while flows to Norway and Russia Energy Sector Funds have faltered in recent weeks.
YTD Commodities Sector Funds remain atop to inflow rankings, followed by Financial and Technology Sector Funds, with Healthcare/Biotechnology Funds at the bottom of the table. Technology Sector Funds have turned in the best collective performance numbers so far this year and Energy Sector Funds the worst.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.