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Hedge Fund Research: Highly Disproportionate Inflows into Non-U.S. Equities Persist

researchNew York (HedgeCo.Net) – TrimTabs Investment Research reported today that U.S. investors have overwhelmingly favored non-U.S. equities this year. While U.S. equity mutual funds and exchange-traded funds have received $12.6 billion, global equity mutual funds and exchange-traded funds have raked in $84.3 billion.

“Global equity funds have received almost seven times as much money as U.S. equity funds this year,” said David Santschi, Chief Executive Officer of TrimTabs. “Fund investors are as convinced as ever that the grass is greener overseas.”

TrimTabs explained that this year’s flows are a big shift from last year’s. In 2013, U.S. equity funds received $150.5 billion, which is equal to 78% of the inflow of $193.1 billion into global equity funds.

“What’s remarkable is that this year’s flow disparity is occurring even though the average global equity fund’s 5.1% gain is not much more than the average U.S. equity fund’s 4.2% rise,” Santschi noted.

In a research note, TrimTabs noted that the financial crisis helped spark outflows of $547.8 billion from U.S. equity mutual funds from 2008 through 2012. Inflows finally resumed in 2013, totaling $12.4 billion, as the S&P 500 shot up 30%. Despite this year’s string of record highs on the S&P 500, U.S. equity mutual funds have lost $10.5 billion.
“The combination of highly disproportionate inflows into global equity funds and their less than stellar performance should be a red flag for contrarians,” said Santschi. “We advise investors to favor U.S. equities over non-U.S. equities now.”

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