Deutsche Bank reports strong equity inflows and buybacks, with stable investor positions over the past two months, despite modest gains in the S&P 500.
Equity positioning is slightly above neutral, while inflows and buybacks remain very strong, according to recent analysis.
Equity funds saw $39.7 billion in inflows, largely due to a record $39.1 billion in China funds. Global funds attracted $5 billion, with US funds gaining $2.7 billion.
In contrast, Japan faced $8.8 billion in outflows, and Europe had $1 billion in outflows, though at a slower rate.
In terms of sectors, technology funds received $7.4 billion, primarily in China Tech. Financials had their first inflow in five weeks at $1 billion, while Consumer Goods and Real Estate also saw positive inflows.
Deutsche Bank notes that the volatility premium is likely to increase with the upcoming US election.
Positioning in bond-like defensives is declining, while interest in cyclical stocks is slowly rising. Mega-cap Growth and Tech stocks remain above average, but lower than peak levels in July.
With earnings season starting, companies may begin buybacks as blackout periods end.
Bonds also saw inflows of $17.5 billion, a six-week high, while money market funds added $16.7 billion. Broad-mandate and government bonds led these inflows, though investment-grade and high-yield bond inflows slowed.
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