Gold was the hottest investment during the first half of 2016 but now, according to figures from Bank of America, investors seem to be turning cautious on the yellow metal.

According to Bank of America’s July 28 Flow Show report, which is compiled by Chief Investment Strategist Michael Harnett and uses data from EPFR Global, outflows from precious metal funds amounted to $0.5 billion over the past week, the first outflow in nine weeks. Redemptions from gold funds also totalled $0.5 billion the largest recorded level of redemptions in eight months.

Mutual Funds See 10 Consecutive Weeks of Outflows As ETFs Gain

Still, compared to equities precious metal funds fared relatively well in the past week.

Redemptions from equity funds amounted to $5.4 billion with mutual funds bearing the brunt of the outflows. For the period mutual funds reported outflows of $8.4 billion while ETFs saw inflows of $3 billion. European equity mutual funds saw outflows of $4.2 billion marking the 25th straight week of outflows; emerging markets funds saw modest inflows of $0.4 billion, the fourth consecutive week of inflows, Japan focused funds reported outflows in a $0. 7 billion and US equity funds reported small outflows of $0.4 billion.

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On a sector basis, the US sectors that reported notable movements include REITs ($0.1 billion inflow – fourth week in a row) and healthcare ($0.4 billion outflows, the largest in four weeks)

Once again, bond funds attracted the most assets from investors last week. Funds in the sector saw total inflows of $7.9 billion. Notable movement are:

  • $3.4 billion inflows to EM debt funds ($14 billion inflows past four weeks, the largest on record)
  • $0.7 billion inflows to HY bond funds (four straight weeks)
  • $3.2 billion inflows to IG bond funds (inflows in 20 of past 21 weeks)
  • 45 straight weeks of inflows to Munis ($0.7 billion)
  • Seven straight weeks of inflows to TIPS ($0.3 billion)
  • $0.6 billion outflows from Govt/Treasury funds (outflows in four of past five weeks).

Year-to-date gold inflows still significant 

The main take away from Bank of America’s report is that last week was yet another week where investors bailed on equities in favour of fixed income securities as they search for safety in an uncertain environment.

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Year-to-date figures show that the net fund outflow from global equities is $134.7 billion. Long only funds have suffered the brunt of the outflows with $167 billion fleeing the sector. ETF’s have fared much better recording inflows of $32 billion year-to-date. Almost all of the net fund outflows ($129 billion) have originated from developed market equity funds. Year-to-date, US equity funds have seen net outflows of $70 billion and European equity funds have seen net outflows of $71.3 billion.

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To put these flows into some perspective, year-to-date long only equity funds have lost an estimated 3.1% assets under management, while flows into ETF’s have boosted assets in the sector by 1.4%. Inflows into bond funds year-to-date ($109 billion) have increased assets under management by 3.2% and inflows into commodity funds ($30 billion) have increased assets under management by 23.9% so far this year.

Investors abandon gold, equities turn to bonds
Investors abandon gold, and equities turn to bonds