Bank of America Merrill Lynch’s weekly Flow Show report, which is put together by the bank’s Chief Investment Strategist Michael Hartnett, has picked up an interesting trend in private investor flows this year.

BoA: Investors like stocks but don’t love them

According to the report, sentiment among Bank of America’s private clients is positive, but far from euphoric as while equity allocations are high, investors were generally net sellers of stocks in 2016, preferring to take risk in fixed income rather than equities. At the end of the first trading week of January, $1.2 trillion of private client assets based at Bank of America were 59% allocated to equities, down from the peak of 63% printed in March 2015. 23% of client assets were parked in debt, 12% in cash and 5% of assets in other instruments. The lowest equity allocation among private clients since 2005 was recorded during February 2009 when the percentage of assets allocated to equities dropped to 39%.

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On a sector basis, relative to the S&P 500 clients are most overweight Consumer Staples with an overweight of 2.6 percentage points compared to the index. Clients are most underweight Tech with an underweight of 3.8% percentage points against the index. Financials remain underweight by around 0.5 percentage points despite the recent rally.

Overall, during 2016 private client brought a total of $26 billion in bonds and sold a total of $9 billion in equities, reversing the trend of equity buying that was in place between 2013 and 2015. High yield was the preferred debt sector with allocations rising by five percentage points to 16% from 11% a year ago.

BoA: Trend to ETFs Continues

Equity ETFs have been the biggest winners of client flows since 2008. Prior to 2008 ETFs generally made up 3% of total equity holdings but today this allocation has grown to 11%. Conversely, back in 2008 mutual funds made up 30% of total equity holdings compared to only 25% today.

For the week of 1/11/17 Bank of America clients brought $8.1 billion of equities ($10.6 billion of ETF inflows and $2.5 billion of mutual fund outflows), brought $7.8 billion of bonds (the largest inflows in three months) and for the ninth week in a row clients sold precious metals to the tune of $0.7 billion. Investment-grade bond funds attracted the most capital with inflows of $3.8 billion.

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