JPM notes CTA moderate long positions in global equities

On Tuesday, JPMorgan’s Delta One Desk provided insights into the latest trends in exchange-traded funds (ETFs) and futures flows, highlighting the positioning of Commodity Trading Advisors (CTAs) across various asset classes. According to the desk’s strategists, CTAs are likely holding moderately long positions in most global equity markets.

Last week, equity ETFs experienced below-average inflows of $6.2 billion, a decline from previous weeks, while commodities saw a marginal inflow of $0.2 billion. In contrast, fixed income funds attracted substantial inflows amounting to $10.9 billion, and currency/multi-asset funds received $3.3 billion, indicating a strong investor preference for these asset classes.

Regionally, a shift from U.S. to international investments resumed, with the U.S. recording weak inflows of $1.0 billion. International flows were robust, particularly into International Developed Markets, largely due to a significant Blackrock (NYSE:BLK) model portfolio rebalance. This rebalance involved selling IVV, an S&P 500 ETF, and purchasing EFV, an EAFE value ETF.

Thematic ETFs saw their largest inflows in four years at $5.2 billion, primarily driven by the same large model portfolio rebalance that favored funds like THRO and BAI. Conversely, dividend, low volatility, and growth funds experienced outflows. Leveraged ETFs, including TQQQ, NVDL, and TSLL, faced their largest weekly outflows in four months. TSLL, currently trading at $16.54, has shown remarkable volatility with a 93.63% return over the past year despite a significant -25.72% decline in the last six months. InvestingPro analysis reveals several more key metrics and insights about this volatile instrument, helping investors make more informed decisions about leveraged ETF exposure.

The technology, discretionary, and healthcare sectors saw notable outflows, while communication services, energy, and industrials attracted inflows. The rebalance also influenced significant movements into international and inflation bond ETFs, with purchases in IAGG and STIP, respectively, and strong inflows into long-term U.S. Treasury bonds, led by TLT and TLH. For investors seeking deeper insights into sector rotation and ETF movements, InvestingPro offers comprehensive analysis tools and real-time data to help identify emerging trends and opportunities across all market sectors.

In the cryptocurrency space, ETFs like IBIT recorded their second-strongest weekly inflows year-to-date, totaling $3.2 billion.

Futures flows revealed large net buying in VIX, FTSE 100, JSE Top 40, U.S. natural gas, and corn futures. However, there was substantial net selling in Korea equities, specifically the KOSPI 200, and in Korean 10-year rates.

CTAs’ positioning in rates is neutral to long on the front end and short on the long end in U.S. and EMEA markets. Their stance on commodities is generally long, except for energy, where they remain net short, and they have mixed exposures in agricultural and base metals.

Asset managers have increased their long positions in the Nasdaq (NDX) and reduced longs across U.S. Treasury futures week over week. Leveraged funds have trimmed their shorts in U.S. Treasuries but increased shorts in the Ultra bond contract. Managed money has notably cut shorts in wheat and reduced longs in soybeans.

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