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Investors have pumped almost $140bn into US equity funds since last month’s election as traders bet Donald Trump’s administration will unleash sweeping tax cuts and reforms in a boon to corporate America.
US equity funds have notched up inflows of $139.5bn since Trump’s victory on November 5, according to data provider EPFR. The rush of buying made November the busiest month for inflows on records stretching to 2000.
The flood of new money has helped to drive the major US stock indices to a series of record highs, with traders shrugging off concerns that policy proposals such as widespread increases in tariffs could drive up inflation and threaten the Federal Reserve’s plans for further interest rate cuts.
“The growth agenda that Trump is putting on the table is being fully embraced,” said Dec Mullarkey, managing director at fund manager SLC Management, adding that Trump’s picks for top administration posts have been “pretty market friendly.”
Trump plans to pack his administration with financiers, including investor Scott Bessent as Treasury secretary and crypto enthusiast Paul Atkins as Securities and Exchange Commission chair. The president-elect has also vowed that his government will seek to cut regulations and taxes as part of an agenda aimed at boosting growth.
The S&P 500, Wall Street’s main equities barometer, has risen 5.3 per cent since election day, bringing its gains for this year to 28 per cent. Smaller companies, which are seen as more sensitive to fluctuations in the US economy, have performed even better since the election, with the Russell 2000 last week hitting a record high for the first time in three years.
Kevin Gordon, senior investment strategist at Charles Schwab, contrasted the broad gains with previous market surges in 2021 and the first half of this year.
“The healthy aspect of [the rally] right now is we’re not getting a repeat of 2021 when the market was hitting all-time highs but breadth was deteriorating. I think it’s a relatively healthy set-up” he said.
November was the strongest month for flows into equity funds globally since the peak of meme stock mania in early 2021. However, strength in the US disguised weakness elsewhere, with investors yanking money from other markets that are seen as more vulnerable to a potential trade war.
Funds that invest in emerging markets have suffered net withdrawals of $8bn since the election, including around $4bn exiting China-focused funds. Those that invest in western Europe have lost around $14bn and Japan-focused funds lost around $6bn, according to EPFR.
US stocks have consistently outperformed regions such as Europe in recent years, thanks in large part to the strength of the tech sector. However, the gap has extended since the election, with analysts at Bank of America this week describing the trend as the “American exceptionalism” trade.
“When there is geopolitical risk in the world, the US is a safe haven, even if they’re the cause of that geopolitical risk, ironically,” said Mullarkey.
The latest surge has brought year-to-date inflows into US funds to $350bn, putting it on track for a record year, and few investors expect the recent rally to come to an end soon. This week alone, a host of banks and asset managers have predicted further strong gains for US stocks in 2025, including BlackRock, Northern Trust and BofA.
“We see the US still standing out versus other developed markets,” BlackRock said in its annual outlook report.
Parag Thatte, a strategist at Deutsche Bank, said November’s rapid pace of inflows was likely to slow as post-election euphoria fades, but said longer-term trends could continue to encourage new inflows that would boost the US market next year.
“We don’t expect this kind of pace to continue, but we do think we will see fairly strong inflows in 2025,” he said, citing solid projections for economic growth and corporate earnings, and healthy household cash balances. “There are strong fundamental reasons for risk appetite to be high at this point.”
