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Last week’s outflows from Materials were largest ever

© Reuters. Last week’s outflows from Materials were largest ever – Bank of America
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By Senad Karaahmetovic

Last week, when the fell by 3.3%, Bank of America saw an outflow of $4.8 billion among its equity clients, marking the largest weekly outflow since April last year.

The selling activity was mostly concentrated in single stocks while ETFs witnessed small outflows as well. Outflows over the last two weeks were $6 billion in total, which is still “not extreme,” according to Bank of America strategists.

“Historical instances of similar or greater outflows as a % of mkt. cap saw better-than-avg. S&P 500 returns over the next month (1.0% vs. 0.7%) but not over the subsequent three, six, or 12 months,” they wrote in a client note.

Overall, all three Bank of America client groups (retail, institutional, and hedge funds) were sellers. All 11 sectors recorded net outflows, which happened for the first time since September 2017, led by Industrials, Communication Services, and Energy. Interestingly, Materials witnessed the largest-ever outflows.

“Outflows from cyclical sectors in aggregate were larger than defensive outflows; overall, we have seen flows favoring defensives>cyclicals the last two months,” the strategists concluded.

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