Global equity funds pull in record cash even as tech stumbles

Big inflows, thin skepticism

Bank of America's strategy team says money is flooding into stocks this year, with an annualized $1.4 trillion heading into global equity funds. Within that total, US equity funds absorbed $656 billion, while $222 billion flowed into technology shares and $78 billion into Korean stocks, according to the group led by Michael Hartnett.

"Inflows remain impressively supportive of stock markets but also show while there are lots of investors emotionally bearish right now, very few are 'physically' bearish, i.e. short or underweight," they wrote. That push of cash lines up with gains: the MSCI All Country index is up 10% this year, the Nasdaq 100 has risen 12%, and Korea's Kospi has climbed 25%.

What rocked markets

Despite the steady inflows, tech-heavy indexes recently hit a rough patch as investors questioned the payoff from artificial intelligence spending. Higher oil prices also lifted inflation, pushing bond yields up and tilting policy more hawkish.

Hartnett's team says the past six months have been tough for risk assets as bullish positioning met tighter policy. Some summertime beliefs have since unraveled - notably the idea the Federal Reserve would avoid rate hikes and that Democrats would not sweep the midterm elections - leaving "the last bull conviction standing." The Nasdaq 100 has logged two pullbacks of more than 10% since June.

Successful investing often comes from quietly adopting tools that improve decision making. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.

The bar for turning risk-on

US household equity wealth fell by roughly $3 trillion in the past month, yet the team estimates it remains about $19 trillion above where it stood at President Donald Trump's inauguration in Jan. 2025. They argue it is "hard to get a recession" when wealthy households feel flush and personal consumption makes up about 70% of the US economy.

Shorting also looks like a tough sell when policymakers treat markets as too important to fail, they added, pointing to Taiwan's $15 billion stock support fund and similar efforts by Korean and Chinese authorities. Even so, the strategists remain risk-off until rate hikes stop and financial conditions ease - which they only expect once US crude drops below $70 a barrel, the dollar's latest surge reverses, and 10-year US Treasuries yield less than 4.5%.

Why it matters for your portfolio

In plain English: the tape is being propped up by money coming in, but policy and oil are doing the pushing on the other side. If Hartnett's thresholds hit - cheaper oil, a softer dollar, and sub 4.5% on 10-year Treasuries - they see a friendlier backdrop for risk. Until then, the market's resilience rests on inflows and the notion that authorities will keep stepping in.

Staying curious about new approaches can help investors navigate changing markets. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.