2020 has left us interesting thoughts in terms of investment flows.
In the following graph, we see how both passive and active investment flows have behaved since December 2019.
Datos: Lipper Database. Elaboración propia.
In times of crisis, everyone towards Monetary funds
The first thing we can see is the great inflow towards the Money Market, especially in dollars, which we saw in March and April as a result of the Covid-19 crisis.
Investors, frightened by the economic consequences of the crisis, chose to take refuge in risk-free assets.
A good decision?
Probably not since, like many times, investors are late. A good decision would have been to do the same during the month of February or the beginning of March.
Are investors late again?
The equity rally began in April and lasts unitl today, but as we see in the graph, investors started investing in equities due to the news of the vaccine at the end of November. In December we saw an inflow of € 85,000 million towards Equities.
Perhaps, who did not invest in April or May, has already missed the best of this upward movement. However, if this is the beginning of a long-term bull cycle, it is not too late yet for those investors.
There is still a lot money stucked in Monetary Funds
Despite the fact that since May we have been seeing divestments in the Money Market, there is still much to do.
In fact, at the aggregate level, only 25% of the volume in Monetary has been disposed of since the peak in May.
We are seeing slowly how that money stuck in the Money Market flows towards Fixed Income and Equities.
Undoubtedly, this will be one of the key elements for 2021, and provides a point of optimism for those investors who are still doubtful about whether to get rid of those monetary positions that do not provide profitability in a context of zero interest rates.