June has seen a notable uptick in equity inflows, reaching the highest levels in three months as global markets hit new peaks. This surge has been predominantly driven by the US, with equities in the rest of the world, especially Europe, lagging behind. As a result, there has been a growing concentration and crowding around US and technology sectors.
According to Goldman Sachs strategists citing the NAAIM survey, equity positioning among active managers has shown volatility in June, initially pulling back before rebounding to previous highs. This trend is reinforced by CFTC data on asset manager equity futures positioning, which remains near its peak.
Investor sentiment, as reflected in the AAII survey, remains stable and bullish, although slightly below the euphoric levels seen in March. The fear and greed indicator has also shifted from greed to more neutral levels over the past month.
Retail investors continue to increase their equity exposure consistently, with slight increases in call option buying compared to recent months, though still below the highs seen earlier in the year. Traditional retail ETF flows have remained positive, driven by a fear of missing out (FOMO) that continues to drive retail investors to chase the market.
Goldman strategists noted, “Steady inflows and equity markets at highs mean US household balance sheets are heavily loaded with equities more than ever before.” They added that equity holdings as a share of financial assets have rebounded to record-high levels year-to-date.
Similarly, household equity exposure in the EU and UK has reached two-decade highs, though not yet surpassing levels seen during the dot-com era.
Regarding hedge and risk control funds, Goldman highlighted an increase in equity exposure, whereas CTAs and risk parity funds have slightly reduced risk, maintaining high exposure levels nonetheless.
Related topics: