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Bank of America flags massive inflows to crypto funds

Published 03/01/2024, 07:45 AM
Updated 03/01/2024, 07:49 AM
© Reuters Bank of America flags massive inflows to crypto funds

The latest data reveals significant inflows across various asset classes for the week ending February 28, with cash leading at $38.7 billion, followed by bonds at $13.8 billion, and stocks at $10 billion.

Bank of America analysts said money market fund inflows “are already so massive,” signaling a potential record-breaking year.

Crypto assets also saw a notable increase, with $2.4 billion inflows, while gold experienced outflows of $500 million, according to BofA.

Year-to-date, cash inflows are on track to reach an unprecedented $1.4 trillion, matching previous record highs. Crypto funds have already surpassed the inflow peak of 2021, with year-to-date inflows hitting $7.7 billion, compared to the $5.2 billion during the crypto bubble.

The tech sector also saw a significant influx, with $4.7 billion in inflows, the largest since August.

Analysts highlight that Federal Reserve cuts are igniting "animal spirits," driving investors towards riskier assets.

This shift is evident in the remarkable performance of emerging market distressed debt, up 24% since October “as investors chase "spread compression”.” Biotech and small-cap growth sectors also witnessed notable gains.

However, emerging market stocks recorded their first outflow since November, totaling $1 billion, after 12 consecutive weeks of inflows amounting to $63 billion. This trend is partly attributed to a significant $1.6 billion outflow from China, the largest since October.

In a regional equity breakdown, the US experienced its third consecutive week of inflows at $11.3 billion, while Japan continued to attract funds for the seventh week, totaling $1.2 billion.

Europe, on the other hand, faced its ninth week of outflows, amounting to $32 million, indicating varied investor sentiment across different markets.

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