Banks lead the equity sector inflows - Lipper

LONDON, Sept 24 Tue Sep 24, 2013 8:48am EDT

LONDON, Sept 24 (Reuters) - Banks and financials stocks have had a pretty good year.

The Thomson Reuters Global Financials index is up more than 20 percent in the last 12 months, and although the aftershocks of the financial crisis still offer the odd sting, investors are seeing bright spots for the sector.

That confidence is increasingly obvious in the fund flows.

Thomson Reuters' Lipper tracks more than 7,000 mutual funds and exchange-traded-funds (ETFs) which are dedicated to specific industry sectors. Dig into the data in this subset of funds, and you start to see where the biggest bets have been made.

Just shy of 500 of these funds focus wholly on banks and financials. Together they hold more than $46 billion in assets.

Last month, they suffered a total net outflow of around $1 billion, according to Lipper. But on a one-year view, 10 months of net inflows have driven an injection of over $10 billion.

The numbers are based on data available as of this week, and there will be some funds missing from the sample, but it still provides a useful snapshot of sentiment and amounts to a concerted bet on the sector, particularly in the U.S. where the bulk of assets in these single-sector funds are held.

The inflows equate to about 22 percent of the latest published assets under management in the segment. ()

Cumulative gains or losses over the 12 months are shown in the blue area. Monthly flows are shown by the red bars. Most of the inflows have been into ETFs rather than mutual funds.

The banks & financial sector was by far the most popular, both in absolute terms and relative to the assets held.

RISING TIDE

Cyclical consumer goods and services funds () managed a net inflow equivalent to about 18 percent of their latest published assets over the 12 months, while biotech funds and pharma/healthcare funds were at 15 percent and 10 percent respectively. Pharma/healthcare was in second spot in absolute terms, with a 12 month net inflow of $7.8 billion, while global real estate () was third with $5.6 billion.

The global real estate equities sector was the most consistent over the year, pulling in overall net inflows in 11 out of the 12 months, according to Lipper's estimates.

Information technology funds only managed net inflows equivalent to 1.6 percent of assets over the 12 months in this sample - well below the average for all 20 sectors, according to the Lipper estimates.

But the last four months have been marked a resurgence and the funds posted overall net inflows of more than $1.2 billion in both May and July - the biggest monthly results since the beginning of 2011 and a turnaround which hauled the sector back into the black for the year. ()

Of course, equities are enjoying a long summer and a rising tide lifts all boats - or at least it tries to.

Some sectors are still under water, and telecoms services funds posted net outflows over the 12 months equal to 13 percent of assets, suffering 10 down months in the process.

Gold and precious metals equity funds saw one of the sharpest reversals, but it's noticeable that it pivoted on a $1.4 billion net outflow in January as investors, whether by luck or judgement, anticipated an about 20 percent fall in the gold price since then. ()