First-quarter flows to tech stocks third largest on record – BofA

LONDON (Reuters) -Tech stocks saw inflows of $18.6 billion in the first quarter of the year, the third largest quarterly inflow on record, and also attracted funds in the past week, along with large flows to cash and bonds, Bank of America Global Research said Friday.

Cash equivalent money market funds saw $81.8 billion of inflows in the week to Wednesday, the largest in 13 weeks, BofA said in its weekly roundup of flows in and out of world markets, which cites data from EPFR.

The bank attributed that inflow to quarter-end effects.

There were $14.2 billion of inflows to stocks in general, with $1.1 billion to tech specifically, in the week and $13.4 billion to bonds, with $9.7 billion to investment grade corporate debt BofA said.

The data does not include Thursday, which saw all three major U.S. indexes fall around 1%, dragged down by elevated oil prices on the back of tensions in the Middle East, and leaving the S&P heading for its biggest weekly fall since October. [.N]

That weekly milestone is, in part, a reflection of the relentlessness with which U.S. stocks rose in the first quarter, with tech names to the fore, helping major indices to repeatedly hit new record highs.

As for flows to cash, BofA note that in the past five Fed rate cutting cycles, flows to money market funds rose in anticipation of the first cut, slowed meaningfully once the Fed began cutting, and outflows started 12 months into the cutting cycle.

“Cash as a percentage of (assets under management) will fall into rate cuts as cash underperforms other assets,” the analysts wrote.

Current market pricing suggests roughly a two-thirds chance of the Fed cutting rates by its June meeting, according to CME’s Fedwatch tool.

(Reporting by Alun John; Editing by Amanda Cooper and David Evans)