BoA’s clients are moving to sell tech as the growth story unwinds.
After a brief period in which investors sold equities, Bank of America’s private and institutional clients, who have been selling stocks for the past two weeks, led buying in the week to 5 July as for the first time in four weeks, the bank’s clients became net buyers of US equities.
According to Bank of America’s weekly Equity Client Flow Trends report, in the final week of the second quarter clients were net buyers of equities overall, pumping $1.4 billion into the market. As per usual, ETFs were the largest beneficiaries of the flows. Single stocks continue to be sold. Pension fund clients were net buyers of US stocks for the fifth straight week.
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For the week, ETF’s attracted $1.69 billion inflows while single stocks saw withdrawals of $147 million.
Hedge funds moved against the trend, selling stocks after buying during the prior two weeks. Throughout the first and second quarter as a whole, private clients were the only net buyers while institutional clients and hedge funds were net sellers in both quarters. But private clients’ net buying was entirely in ETFs; single stocks saw net sales by this group and sell Tech was among the hottest themes.
Investors Sell Tech As FANG Euphoria dies
During the last week of the second quarter, investors sold energy and tech stocks, which are interestingly the worst and best performing sectors year-to-date. Reasons behind the selling appear to differ greatly with investors selling energy as oil prices declined and tech selling a result of a loss of momentum. For the week, tech sector outflows amounted to $418 million across all client types, and energy net selling came in at $508 million compared to 12-week averages of $229 million and $100 million respectively (both outflows).
Along with the tech/energy sector flows the other noticeable trend that stands out in Bank of America’s data is the sudden reversal of sentiment for the bank’s private and institutional investors. Specifically, net buying by private clients last week totaled just under $800 million. For some comparison, the 52-week average is a net inflow of $101 million. On this basis, last week net private client inflows were nearly 700% above the 52-week average. Institutional flows are even more diverse. Bank of America’s 52-week average net sales for institutional clients is $1.04 billion. In comparison, last week net inflows from institutional clients amounted to $694 million, a complete reversal from the 12-month average.