Last week the biggest week for equity mutual funds since 2000 reported, and this week the buying spree continues—but only for certain clients, according to analysts at Bank of America Merrill Lynch. BAML says that clients bought $178 million in net U.S. stocks for the second week in a row.
However, they note that while 2013 got off to a bang with all three types of clients being net buyers of equity mutual funds, this week they say private clients are out-buying the other two types of clients. They also say that hedge funds and institutions were shifting toward net sales of mutual funds this week. BAML said last week inflows from private clients were at their highest level since 2011 and the third-highest level since 2008.
Prescience Partners returned 6.75% for the second quarter, underperforming the S&P 500's 8.55% return but coming out ahead of the Barclay Equity Long/ Short Index's 2.62% return. However, for the first six months of the year, Prescience is up 30.66%, doubling the S&P's 15.25% return and smashing the Barclay Equity Long/ Short Index's 9.27% return. Read More
BAML notes that for two weeks in a row, the telecom sector led other sectors for inflows. They said last week’s inflows from telecom buys were larger than those that came right after the fiscal cliff deal, which extended the 15 percent tax rate for dividends for most taxpayers. Other bright spots were in health care, ETFs, and staples.
The analysts noted that just like the previous week, the largest outflows were in the materials and tech sectors. They said net sales of materials were at their highest level since November 2011. BAML said hedge fund net sell-offs were also the highest level they have been at in seven months. Also last week was the “first time since October that private clients” bought stocks in the materials, industrials, tech, and financials sectors.