* Biggest week of net buying since May 2009
Last week, during which the S&P 500 was down 0.2%, BofAML clients were big net buyers of $5.1bn of US equities—the largest week of inflows since May ‘09. All three client groups were buyers, led by institutional clients who bought stocks for the fifth consecutive week. This follows capitulation from US stocks by this group last year. Flows at extremes often signal shifts in trends, suggesting the recent short-term net buying trend by this group could be sustainable. Private clients continued their net buying streak last week and have now bought stocks in all but three of the last 34 weeks (since late May). Hedge funds were net buyers after two weeks of net selling.
* Record Tech inflows; clients get cyclical
Seven of the ten sectors saw net buying by our clients last week, led by record inflows into Tech (see below). Discretionary, Health Care and Materials all saw near-record inflows as well, with the second, third, and third-largest net buying in our data history, respectively. The largest net sales were of ETFs and Energy, while bond-like Utilities and Telecom also saw outflows. Tech currently has the longest net buying trend at four consecutive weeks, while no sector has a multi-week net selling trend. The cyclical sectors of Discretionary, Industrials, Tech and Materials saw net buying by all three client types last week, while no sector saw net sales by all three. We expect clients to continue rotate out of defensives and into cyclicals as growth reaccelerates in 2014.
* Other notable flows: Broad-based buying of large & mid caps
- Institutional clients’ net buys last week were the largest since May 2009, and private clients’ net buys were the largest since January 2013.
- Large and mid caps saw net buying by all three client types last week; no size segment saw net sales by all three.
- BofAML pension fund clients were net sellers of US stocks last, but remain cumulative net buyers in 2014 thus far following large net sales by this group last year. Net sales last week were chiefly in ETFs, while seven of the ten sectors saw net buying, led by Health Care and Discretionary. See pg 9 for details.
* Chart of the week: Record Tech inflows
Tech saw the largest inflows in our data history last week, with all three client types buying Tech. Net buying was chiefly in large caps, though mid caps also saw inflows. We expect inflows to continue into Tech and other globally-oriented cyclical sectors— which are trading near record low valuations—as global growth picks up in 2014