BAML Equity Clients Buy Stocks For The First Time Since March

BAML clients became net buyers of U.S. stocks for the first time in seven weeks. The net purchases were attributable to hedge funds and institutional clients, while private clients were net sellers.

In its today’s report titled “BAML Equity Client Flow Trends” it says last week was the first time institutional clients bought stocks since March, while hedge funds have been consistent net buyers for four consecutive weeks. However private clients have been net sellers having sold stocks in six of the last seven weeks.

The report published by BAML provides an aggregated view of its clients’ trading flows into U.S. stocks executed by the cash equities business of BAML.

The report highlights only hedge funds kept faith in the recent rally that took S & P 500 up by 1.2 percent to another high of 1633. This is amply evident from the following diagram:

S&P 500 up by 1.2 percent to another high of 1633

In terms of sector, last week investors showed confidence in Financials and Energy which saw the largest inflows, while Industrials and Discretionary saw the largest outflows.

BAML report further analyses that no sector saw net buying by all three client types last week, while Industrials, Materials and Telecom were shunned by all three client types. The following graph further corroborates this analysis:


According to the report, last week’s net buying was led by ETFs. This was primarily due to private clients’ flows, as both institutional clients and hedge funds sold ETFs.

The report observes health care particularly saw large sales by private clients, since their net sales of this sector were the greatest in BAML’s data history since 2008.

Further BAML pension fund clients were net buyers of U.S. stocks for the third consecutive week, with net buying visible across all three size segments.

The BAML report notes outflows during 2013 have been largely in the large caps space, since both mid and small caps have seen inflows. However last year only mid caps saw net buying.

Interestingly, according to BAML report, pension funds have been much more consistent net buyers of U.S. equities as they are the net buyers of U.S. stocks in 2008, 2009, 2010 and 2012, while institutional clients overall were only net buyers in 2009 as well as in 2011. This view is strengthened from the following graph showing pension fund client’s cumulative net buys of U.S. equities from 2008:

 showing pension fund client’s cumulative net buys of US equities from 2008