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Last week, during which the S&P 500 lost almost 2.7%, investors were selling U.S. equities for the third consecutive week, the data compiled by Bank of America showed.
The bank’s institutional and retail clients, as well as hedge funds, were all net sellers last week. BofA’s clients continue to prefer stocks to ETFs, a trend that was first observed in January and early February. Cumulative ETF flows are negative so far year-to-date (YTD).
“We continue to see this as a good backdrop for active>passive,” BofA strategists wrote in a client note.
Data also showed that the bank’s clients continue to sell Industrials and Financials while Tech stocks saw the biggest inflows last week. Together with Discretionary, Tech has seen the most consistent inflows YTD.
As far as futures positioning is concerned, last week’s data shows that sellers are coming back.
“Return of the bears,” is how Citi’s analysts described last week’s flows in the futures market.
“The S&P 500 trading back down through 4,000 has been followed by investors cutting back bullish futures positioning and ETF outflows. However, net positioning remains positive either indicating that there is more positioning to unwind or that investors are not convinced about the recent bearish turn,” analysts added in a client note.
Elsewhere, investors were also selling Eurostoxx50, which was over $4 billion in new shorts added last week.
Overall, the net positioning remains moderately bullish in both these markets.
“A bearish turn of sentiment could run further if momentum in flows picks up,” analysts added.
