Every week, the BofA Merrill Lynch equity strategy team breaks out data on how many stocks clients are buying and selling.
According to the latest data out this morning, BAML private clients (retail investors) were the only group buying stocks last week as the S&P 500 advanced, while hedge funds and big institutions were selling.
The chart below shows that while private clients have done quite a bit of buying in 2013, the big institutional players have really been doing nothing but rotating out of stocks.
And although the retail investors are the only ones buying, they’ve given up picking stocks, and are now just putting new money into ETFs:
Last week, during which the S&P rallied 3.0% to a new all-time-high of 1680, BofAML clients were net sellers of U.S. stocks after being net buyers the previous week. Net sales were $1.3 billion, with outflows across the size spectrum. By client type, net sales were led by institutional clients, who have sold U.S. stocks for the past four weeks. Hedge funds were also net sellers, following two weeks of net buying.
Private clients were the sole net buyers, and this group has now bought stocks for seven consecutive weeks, beginning the week after the S&P peaked in late May. However, this group finally broke its recent trend of being a net buyer of single stocks, with inflows last week entirely due to ETFs. This is also the case [year-to-date]: private clients are sole net buyers of U.S. stocks, but entirely due to ETFs. In our view, continued purchases of single stocks by this group would suggest ongoing confidence in the bull market.
So far in 2013, BAML’s retail clients have put $7.37 billion into equities, while big institutions have taken $10.69 billion out of the stock market, and hedge fund clients have reduced their holdings of the asset class by $423 million.
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