Deutsche Bank reports equity positioning drops to underweight

Deutsche Bank's latest global strategy note reveals that aggregate equity positioning has dropped to a significant underweight status, marking the largest weekly decline since Liberation Day. According to the report led by Parag Thatte, discretionary investor positioning fell below the usual lower limit of the band. Systematic strategies have shifted from being "well overweight" to a position slightly above neutral, while volatility-control funds have reduced their equity allocation to the lowest levels since April.

CTAs' equity allocation has also dropped to its lowest level since May. The biggest underweight in 3.5 years has been experienced by mega-cap growth and tech positioning. Despite the overall drop, equity fund inflows for the week ended November 4 surged by $89.2 billion. The surge was primarily driven by emerging market funds, which recorded the biggest inflows on record at $45.1 billion, followed by US funds at $31.7 billion.

Positive tech equity fund inflows of $9.8 billion were also reported. Meanwhile, bond funds received inflows of $11.6 billion and money market funds saw large inflows of $140.4 billion.