Twelfth week of sales—but hedge funds were buyers
Last week, during which the S&P 500 was up 1.6%, BofAML clients were net sellers of US
stocks for the twelfth consecutive week, in the amount of $1.36bn. Sales were chiefly in
large caps, though all three size segments saw outflows. The pace of selling slowed for the
second week, but persistent sales suggest to us that clients continue to doubt the market
rally. Institutional clients continued to lead the selling, while private clients have the
longest selling streak (ten consecutive weeks). But after seven weeks of sales by all three
client groups, hedge funds were net buyers last week for their first time in nine weeks.
This follows record net sales of US stocks by hedge funds in 1Q (see chart below).
Buybacks by our corporate clients decelerated last week, but are in-line with what we
typically see in early April (a seasonally slow period for buybacks).
Cyclical sectors saw the largest outflows
Clients were broad-based sellers of single stocks across all ten sectors last week, led by
the domestically-oriented cyclical sectors of Consumer Discretionary and Financials.
Stocks in defensive sectors (Utilities, Health Care, Staples and Telecom) saw the
smallest outflows last week. Any buying was entirely passive—only ETFs saw inflows.
Health Care—which has been hurt by a positioning unwind and political uncertainty in an
election year—continues to have the longest net selling streak at seven consecutive
weeks. Tech has seen the biggest outflows year-to-date, but sales have generally
levelled off since early March and have been relatively muted most weeks since then.
Other notable flows: broad-based buying of ETFs
• ETFs saw net buying by institutional clients, hedge funds and private clients alike last
week. Energy, Health Care and Consumer Discretionary saw net sales by all three.
• Year-to-date, only the bond-proxy sectors of Telecom (led by private clients’ buying),
Utilities (led by hedge funds’ buying) and Materials (led by corporate buybacks) have
seen inflows from our clients.
• Pension fund clients were net buyers of US stocks, following a week of selling.
Buying was largely in ETFs, but Industrials stocks also saw large inflows. This group
remains a net buyer year-to-date. See Pension fund flows for details.