Investors Flood Stock ETFs with Most Cash Ever on Trump Win

Investors turned on a dime after Donald Trump's surprise victory as U.S. president, showering the most money on U.S.-based stock exchange-traded funds ever during the latest week, Lipper data showed on Thursday.

The cash movements over the seven days through Wednesday marked a drastic turnaround of the major trends in fund investing this year, with a move back to stocks, from bonds, and a powerful reemergence of the inflation trade and sector bets. U.S.-based ETFs that invest in stocks took in $27 billion, their largest weekly inflows on Lipper's records, which date to 1996, when ETFs were nascent.

"It's possible this might be a paradigm shift," said Pat Keon, research analyst for Thomson Reuters Lipper. "The market has responded after the initial scare Tuesday night, when the election results were coming out, and all the futures were tanking. It settled into a nice rally. A lot of traders had to reposition both their portfolios and strategies."

Markets have interpreted Trump's victory as a boost for inflation, dubbed by some investors as Trumpflation - and potentially economic growth - given the President-elect's plans to boost infrastructure spending and cut taxes.

Investors used ETFs to shift massive amounts of money quickly, as the Dow Jones Industrials Average hit a new record high on Tuesday. Financial sector funds took in $6.7 billion, a new high-water mark for the funds' sales.

Healthcare funds took in $2.7 billion, the most on record. Higher Treasury rates boost the cost of lending and can help bank earnings, while Trump has promised to repeal the Obama administration's landmark healthcare law, the Affordable Care Act. Emerging-market debt funds recorded $1.1 billion in outflows, also a record.

Precious metals commodities funds outflows of $1.9 billion were the largest in more than three years, Lipper's data showed. Municipal bond funds posted $3 billion outflows, the largest in three years. Inflation-sensitive Treasuries posted their worst week in more than seven years.