The highly compensated world of active fund managers continued to disintegrate before their eyes in the last week, when according to EPFR data even as overall cash continued to flood into equities for a total of $14.5 billion, the 11th consecutive week of inflows, this was entirely due to allocations to ETFs, which saw $19.7 billion in inflows, the highest weekly amount YTD, offset by $5.1 billion in outflows from actively managed funds.

Looking at what its private clients are doing, BofA notes that the top 3 ETF inflows past 4 weeks = Financials, Bank Loans, MLPs (page 3); Furthermore, despite all the talk of cash on the sidelines, private client asset allocation has hit 60% for stocks, just shy of all time highs, offset by  bonds 23%, cash 11%.

At the current rate of “great rotation” from active to passive managers, the inflection point at which the two asset classes meet will hit far sooner than the previous forecast.

And speaking of great rotations, another notable feature from last week’s fund flow data was the bond outflows in 12 weeks ($0.1bn), led by largest HY bond redemptions more than 2 years ($5.7bn); contrast with strong inflows equities ($14.5bn this week). According to BofA, YTD equity inflows of $97 billion now substantially surpass bond inflows of $79bn. While it will come as no surprise, junk bond spreads and the eerie calm in the stock market continue to be highly correlated.

Some more fund flow details:

Fixed Income Flows

• Largest HY bond fund outflows in more than 2 years ($5.7bn)
• 12 straight weeks of IG bond inflows ($3.1bn)
• 7 straight weeks of inflows to EM debt funds ($0.7bn)
• 18 straight weeks of inflows to bank loan funds ($0.9bn)
• 14 straight weeks of inflows to TIPS funds ($0.2bn)
• First inflows to govt/tsy funds in 7 weeks ($0.1bn)

Equity Flows

• EM: largest outflow in 11 weeks ($1bn)
• US: largest inflow in 13 weeks ($12bn)
• Japan: 10 straight weeks of inflows ($1.2bn)
• Europe: modest $0.2bn outflow

By sector: largest inflows to US value funds in 16 weeks ($2.8bn) vs $0.3bn outflows from US growth funds; inflows to materials ($0.4bn, 9 of last 10 weeks), utilities ($0.4bn), tech ($0.3bn) and energy ($0.2bn); outflows from financials ($0.1bn), real estate ($1bn, largest in 11 weeks), consumer ($0.1bn), and healthcare ($0.2bn).

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Finally, regarding the timing of BofA’ “Great Fall” market forecast, we are still in the “not yet” phase:

Fed & Humpty-Dumpty: “great fall” in risk assets, “great rise” in vol likely flagged by higher wage inflation (AHE>3%), hawkish Fed (yield curve bear flattens), EPS growth peak, financial “stress” via HY bond spreads (v correlated with VIX); spreads >400bps this week, but need to rise further 50-75bps to elicit cross-asset vo