Investors are still selling stocks according to Bank of America Merrill Lynch’s Equity Client Flow Trends report. The report, which is compiled using the bank’s client trading flows into US stocks executed by the firm’s cash equities business, provides a fascinating weekly insight into the views and opinions of Bank of America’s equity clients, along with some insight into general equity flow trends.

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Figures from the bank show that last week clients were net sellers of US stocks for the eighth week running. Net selling last week by equity clients totaled $521 million. Institutional clients led the selling followed by private investors.

Hedge funds were net buyers of equities last week. Institutions have been net sellers for the past 12 weeks while private clients have been selling for eight consecutive weeks. Hedge funds were net buyers for the first time in five weeks.

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One of the largest buyers in the market were corporations themselves.

Buybacks by BoA’s corporate clients continue to accelerate with the four-week average now at its highest levels since late March. Year-to-date corporate clients of BoA have spent $25.7 billion acquiring stock compared to the total of $41 billion last year and $45 billion for 2014.

Along with hedge funds, pension fund clients also reversed from net sellers to net buyers last week. Pension fund clients were net buyers of US stocks last week, following five weeks of selling. This group bought stocks across all sectors except Energy and Materials, led by flows into Discretionary and Financials stocks.

Private Investors Continue To Dump Stocks Despite New Highs
Private investors continue to dump stocks despite new highs

BoA flows 2

BoA flows 1

Private investors buying Energy at record levels 

An interesting trend that is apparent in BoA’s flows data is the buying of ETFs by clients. Four-week average flows into ETFs by BoA clients turned negative for the first time since May last week, and cumulative flows into ETFs have slowed this year.

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Other datasets also reveal a similar trend. Broader data on US-domiciled passive funds/ETFs (from SimFund) similarly suggests that flows into passive vehicles have slowed from last year’s record levels, though flows out of active funds have continued to accelerate – something I covered a few weeks ago.

On a sector by sector basis, BoA’s client buying was concentrated in the Energy and defensive sectors of Staples, Utilities, and Telecom last week. The most popular sector was Energy, particularly among private clients whose buying of Energy stocks last week was near record levels.

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Telecom continues to have the longest net buying streak (seven weeks) and is the only sector which has seen cumulative inflows by BoA’s clients year-to-date. Financials and Tech stocks were sold by institutional clients, private clients, and hedge funds alike last week. All three groups bought Utility stocks.