Stocks could be set for even higher inflows following record $190 billion during the last 2 months of 2020, Deutsche Bank says

• A record amount of money flowed into stocks during the last two months of 2020, and massive inflows could continue in 2021, said a team of Deutsche Bank strategists.
• In November and December, $190 billion flowed into ETFs and mutual funds, the highest amount on record in dollar terms.
• The strategists said that the pace of equity inflows is closely tied to global growth, and there is "significant room" for inflows to rise if economic growth rises at the pace that Deutsche Bank is forecasting.
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The last two months of 2020 saw the strongest inflows into equity funds on record in dollar terms, and stocks could be set for further inflows in 2021 if the global economy strengthens, according to Deutsche Bank.

$190 billion flowed into ETFs and mutual funds in November and December, said a team of Deutsche Bank strategists led by Binky Chadha on Friday.

"The pace of equity inflows has historically been closely tied to global growth (PMIs). While recent inflows have been running slightly ahead, if global growth picks up in line with DB's house view, there is significant room for inflows to rise," they said.

Deutsche Bank's house view is for global growth to grow 5.7% in 2021, and US GDP to grow 4% in the same time frame. That could push equity inflows higher during the year.

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In just the first week of 2021, $11 billion has flowed into equity funds, a positive sign for equity inflows in 2021.

The strategists noted that during the record inflow period at the end of 2020, financials led the charge. $13 billion flowed into the sector since the November elections. Tech followed closely behind, with $12.9 billion of inflows, and energy saw $11.8 billion.

While inflows into cyclicals accelerated in 2020, those into ESG funds and secular growth funds slowed, the strategists said.