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Investors bet big on large cap stocks as US election swings to Joe Biden and Equity Funds receive record setting inflows

Although the incumbent continued to disagree, both markets and mutual fund investors spent the week following the US presidential election positioning themselves for a US administration headed by president-elect Joseph Biden. Expectations of predictable policymaking that favors economic stimulus, takes a more conventional approach to global trade and shows a greater willingness to regulate sent record-setting amounts of money flooding into Equity Funds, especially those dedicated to large cap plays.

The week ending Nov. 11 saw Emerging Markets, US and Global Equity Funds record their biggest weekly inflows in over eight, 31 and 33 months respectively, propelling all Equity Funds to their largest weekly inflow since EPFR started tracking them over two decades ago. Investor sentiment during the second week of November was also bolstered by encouraging reports about two of the vaccines, one American and one Russian, developed in response to the COVID-19 pandemic. Healthcare Sector Funds posted their 12th inflow in excess of $1 billion year-to-date.

At the comparable point in the aftermath of the 2016 election that saw Donald Trump emerge victorious, investors rotated aggressively from fixed income and emerging markets funds to US Equity Funds and several major Sector Fund groups. Financial, Healthcare/Biotechnology and Industrials Sector Funds all posted new weekly inflow records during the week ending Nov.16, 2016, as did US Equity Funds, while Emerging Markets Bond Funds experienced a record-setting outflow and over $5 billion was redeemed from Emerging Markets Equity Funds.

 

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