The latest data from BAML ETF asset flows shows some interesting new and old trends.
Every week, Bank of America publishes a report outlining the major client trading trends of the week prior. The report provides an aggregated view of the bank’s client trading flows into US stocks executed by the cash equities business of the firm. By aggregating flows across many execution platforms and trading desks, the data provides an overview of what sectors and market caps are being bought or sold, and what type of client is buying or selling. Since the financial crisis, the most consistent trend in the client flow data has been the net buying of ETFs and almost continual selling of single stocks by all client types.
Indeed, since January 2008, Bank of America’s hedge fund clients have sold approximately $20 billion in equities net, while private clients and institutional investors have divested around $180 billion net. Retail investors have been the biggest sellers. For the full-year 2015, to 6 Sept 2017, retail clients have sold $86 billion in single stocks. However, if you include ETFs in the figures, the picture changes completely. Including ETF asset flows retail has sold only a net total of $4.7 billion.
ETF Asset Flows Show - Small Caps cool
In Bank of American's latest flow trends report, the bank's includes detailed ETF asset flows for the first time, to try and add some color to what has become a secular shift away from active management towards passive investing.
For the week of 08/28, investors added $400 million to large-cap ETFs and sold $100 of small-cap focused funds. Value ETFs were more popular that growth funds, attracting $100 million compared to growth's <$25 million. A blend of the two styles was most popular with investors, attracting $260 million for the week. Equity ETFs ( +$400 million) were more popular than fixed income ( +$130 million), but commodity funds also saw buying (+$200 million). Energy & Materials were the two sectors that saw ETF sales but single stock buying while sector ETF net buying was the largest in Staples -- the only sector which saw both single stock and ETF net buying -- while Utilities ETFs saw the biggest net sales (with sales of single stocks in this sector as well).
For the week to 6 September, ETF asset flows tell a different story. Notably, Health Care ETFs have seen the most consistent pickup in net buying over the past few months, in tandem with an end to the record selling streak in Health Care single stocks in late July.
And of course, the updated flow chart which shows the smart money selling the entire rally...