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Investors continued to favor value-oriented sectors of the U.S. economy in January, confirming a rotation that had moved in fits and starts in prior months.
A report prepared by Refinitiv Lipper for MarketWatch shows the strongest flows into exchange-traded funds with exposure to financial services, small-cap stocks, and emerging markets. The strongest outflows, meanwhile, came from the biggest winners of the past year or so: S&P 500 index SPX, +0.39% funds, large-cap growth funds, and high-yield bond funds.
| ETF CLASSIFICATION | INFLOWS |
| Financial-services | $6.68 billion |
| Small-cap core | $5.76 billion |
| Core bond | $5.49 billion |
| Emerging markets | $5.34 billion |
| Alternative energy | $4.02 billion |
| Science & technology | $3.75 billion |
| Inflation-protected bond | $3.69 billion |
| General bond | $3.67 billion |
| International multi-cap core | $3.17 billion |
| International large-cap value | $3.15 billion |
| Source: Refinitiv Lipper |
In addition to looking to previously underloved segments of the market, investors are starting to prepare for other conditions that are normal during this stage of the business cycle, noted Tom Roseen, head of research services for Refinitiv Lipper.
“People are at least paying attention to inflation,” he said. Inflation-protected bond funds were among the top ten biggest category gainers, picking up $3.69 billion.
What’s a bit more puzzling, amid an ongoing bond sell-off that sent the benchmark U.S. 10-year Treasury note yield up nearly 20 basis points during the month, is that general bond funds were also among the big winners in January.
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