Inflows into US equities surged post-election, Barclays says

Investing.com — Inflows into US equities surged to record levels following the US presidential election, according to a Barclays (LON:BARC) report.

The post-election environment, shaped by renewed confidence in US exceptionalism, saw global equity flows hit $102 billion in November—the highest since March 2021.

$109 billion flowed into US equities, a trend that helped fuel strength in the US dollar, at the expense of almost all other regions except Japan.

Remarkably, Barclays’s US strategists believe that positioning has more room to run, “with earnings growth likely to be in double digits,” the report writes.

The investment bank highlights that US equities now comprise an unprecedented 67% of the MSCI World Index, while European equities have declined to an all-time low of 13%.

Barclays strategists note that long-only and hedge fund positioning on US compared to the rest of world (ROW) equities are “near extreme level, with exposure to Europe particularly depressed.”

November saw $9.9 billion withdrawn from European equities, bringing the year-to-date figure to $52.5 billion. Positioning appears particularly underwhelming in Germany, which experienced the largest outflows within the region.

Trump’s victory in the US election “unleashed animal spirits, and the biggest retail buying frenzy since 2021,” Barclays says.

The bank’s strategists point out that assets under management (AUM) in money market funds have reached unprecedented levels.

They suggest that, with interest rate cuts likely to persist into 2025, there is “significant dry powder left for investors to allocate into other asset classes if they rotate out of cash.”

“Equities, in particular, look to be in a good place to benefit now that the US election uncertainty is out of the way,” strategists emphasize.

The report also noted year-end seasonality and corporate buybacks as supportive factors for equity markets. Nearly 80% of announced buyback programs remain unexecuted, offering additional tailwinds into 2025.

Still, while CTAs slightly increased their equity exposure, risk control funds and hedge funds have yet to follow suit, leaving ample capacity for further investment. Moreover, sentiment indicators have not risen in tandem with the broader market, indicating that optimism is less widespread than it might appear.