Despite the ongoing rally in U.S. equities with the S&P 500 up nearly 4% since last Monday (27/03), Bank of America’s clients were selling stocks.
Analysts at the firm highlight $3.2 billion of outflows from U.S. equities, marking the first net sale by the broker’s clients in five weeks. Investors were mostly selling single stocks, the analysts wrote in a regular weekly note on client flow trends.
“Clients sold equities across all three size segments (small/mid/large),” they said.
While hedge funds were net buyers of equities, institutional and retail clients led outflows. The biggest sales were recorded in the Communication Services sector, which marked the second biggest outflows since 2008. Similarly, clients were also selling Tech stocks.
“Energy stocks led inflows as oil prices rallied off lows, followed by Industrials and Materials. Materials continues to have the longest buying streak (last 10 weeks). Clients sold Financials stocks for the first time in five weeks; both hedge funds and private clients were sellers. Institutional clients were buyers for a second week,” the analysts added.
As far as the entire Q1 is concerned, BofA’s clients were buying single stocks and mostly those in the Tech sector. Not surprisingly, the data shows inflows have mainly been in large caps.
BofA analysts highlight that Nasdaq is now in a bull market after rallying nearly 21% in Q1 but they warn the broker’s clients against chasing rallies.
“We don’t think a lower risk-free rate alone is a strong reason to get bullish on equities, if it’s driven by a deteriorating growth outlook leading to a wider risk premium. Historically, a Fed easing cycle (i.e. lower 2-yr yield) combined with a credit tightening cycle (i.e. wider IG credit spread) has been the worst phase for equities. But broad pessimism on equities could be a big tailwind for stocks,” they said in a note.
Written By: Senad Karaahmetovic @Investing.com
The post “BofA witnessed the biggest week of equity outflows since October” first appeared on Investing.com
BullsNBears.com was founded to educate investors about the eight secular bear markets which have occurred in the US since 1802. The site publishes bear market investing recommendations, strategies and articles by its analysts and unaffiliated third-party and qualified expert contributors.
No Solicitation or Investment Advice: The material contained in this article or report is for informational purposes only and is not a solicitation for any action to be taken based upon such material. The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this article or report does not constitute a representation that the investments or the investable markets described herein are suitable or appropriate for any person or entity.