Investing.com -- Money market, Treasury, and US equity funds registered record-high January inflows this year, Bank of America (NYSE:BAC) strategists said in a new weekly report.
In the week ending Jan. 29, stock funds saw inflows of $24 billion, bond funds received $17.6 billion, gold funds added $500 million, and crypto funds gained $200 million, while cash funds saw outflows of $12.6 billion, according to a BofA.
Sector-wise, technology funds recorded their largest inflow in three months at $6.5 billion, while financials attracted their biggest inflow since January 2022 at $2.7 billion.
Year-to-date, money market funds have absorbed $174 billion, Treasuries saw $17 billion in inflows, and US stock funds drew $76 billion.
Globally, BofA said stock funds posted their largest January inflow since 2018 at $93 billion, though emerging market (EM) equities registered their first January outflow since 2016, losing $3 billion.
BofA strategists led by Michael Hartnett said that “US exceptionalism is peaking. US equities raked in $1.2 trillion in inflows since 2015, compared to just $200 billion for the rest of the world (ROW).
Hartnett sees a trough forming in international stocks, particularly in Europe, emerging markets, and China. He expects Trump 2.0 to trigger monetary and fiscal easing in 2025 in Europe and China, but not in the US.
Strategists also caution that "US exceptionalism is now exceptionally expensive, exceptionally well-owned," and expect US outperformance to peak in 2025 as fiscal spending wanes, immigration slows, and the emergence of DeepSeek implies a peak in AI capex return expectations.
By region, US equities recorded their fifth consecutive week of inflows at $20.8 billion in the week through Jan. 29, while EM stocks saw their first inflow in three weeks at $800 million.
Japan posted its first outflow in three weeks at $300 million, while European equities marked their 18th consecutive week of outflows at $23 million.
In fixed income, investment-grade bonds attracted $7.7 billion, marking a 66th consecutive week of inflows.
High-yield bonds recorded their second straight week of inflows at $2.1 billion, Treasuries extended their streak to six weeks with $2.5 billion, and emerging market debt saw its first inflow in four weeks at $1.4 billion. Bank loans continued their strong run with a 17th week of inflows, totaling $2.6 billion.