Tuesday, June 14, 2011

Money Flows to Energy and Materials

A recent Focus on Funds blog post on Barron's cited a piece of research from S&P equity research team saying that energy and materials have "experienced the largest money inflows as a percentage of total assets so far this year. "
In the second-quarter, [energy's] inflows were up 3% on the heels of a strong 8% inflow surge in the first-quarter.

Basic materials, the second most popular fund group in 2011, came in nearly 3 percentage points less in terms of net inflows.
Readers of my Sector ETF Ranking Articles at SeekingAlpha.com would know that my ETF ranking system continuously rank XLE and XLB to be the top two offensive sector ETFs since inception this May, matching the market consensus reflected by money flow. I believe this is a strong proof that fundamentals drive returns, even in short term.

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