Where The Money Is Going And Where It’s Coming From

I highlight the assets and sectors that are seeing the largest inflows and outflows of funds so far this year. I use the S&P 1500 Composite index (SPTM) as the benchmark, representing the broad equity market.

Oil, Nat Gas, LNG and energy stocks are the top performers YTD. USO, the United States Oil Fund ETF, is up 85% YTD. No other asset comes close to that.

This one is a surprise, although it shouldn't be. S. Korea produces many of the semiconductors used in data center buildouts. S. Korea is up 51% YTD.

Telecom companies are up 43% YTD. It was a combination of cheap valuations and high yields that made them attractive to investors.

The AI buildout is still in full swing, and semiconductor stocks are in high demand.

Space exploration stocks are very hot, especially since the news about SpaceX doing an IPO.

This ETF invests in companies that build the data centers that run AI.

The race is on for sourcing rare earth metals, and this ETF invests in companies that are engaged in that effort.

Brazil is enjoying an influx of money, and it's up 28% YTD.

Taiwan is another hot market YTD. Have you noticed a pattern here? Lots of money is flowing into foreign markets this year.

Now it's time to turn our attention to the assets that are providing the funds to buy the top performers. We begin with Software, which has been trashed due to fears that AI will replace many of the tasks that legacy software providers performed.

Crypto has been a source of funds this year, as bitcoin (BTC.X) and ethereum have sold off hard. Chances are good that they will come back and make new highs, but for now, they are underperforming the market.

China is another source of funds, down 14% YTD.

Lastly, we have silver. It started out the year with a monster rally, but since late January it has been giving back its gains.

Final Thoughts

When it comes time to rebalance my portfolio, the first thing I look at is who are the winners and losers over the past 3 months? This is a long enough time frame to establish a trend, and there is always a shift in the leader/loser categories. I also pay close attention to sector flows to inform my U.S. equity allocations. I believe that once an asset or a sector establishes a trend over the most recent 3 months, it is more likely to continue than it is to reverse. 

Paying attention to the 3 month winners and losers is a good way to stay on top of shifting market trends.