😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

BofA Sees ‘Zero Capitulation’ as Stock Funds Take In $17 Billion

Published 01/28/2022, 05:48 AM
Updated 01/28/2022, 07:36 AM
© Reuters.  BofA Sees ‘Zero Capitulation’ as Stock Funds Take In $17 Billion

(Bloomberg) -- The brutal selloff this week isn’t scaring investors from putting their money in the stock market. 

In the week that pushed the S&P 500 Index to the verge of a correction, stock funds absorbed billions of cash. 

There’s “zero capitulation in equity positioning,”  Bank of America. strategists led by Michael Hartnett wrote in a note on Friday. The strategists, who track EPFR Global data, said equity mutual funds and exchange-traded products took in $17.1 billion in the week to Jan. 26. 

While it may sound counterintuitive that stocks can go down when fund flows are going up, it’s only a small part of what’s happening in the market, compared with flows in derivatives. Investors mainly track the data as a gauge of market sentiment. 

It shows that despite the deep losses in tech stocks, there’s still an appetite for risk among the retail crowd. Stock funds have absorbed $84 billion this year and just two out of the 18 trading days have seen outflows, the Bank of America (NYSE:BAC) strategists said. 

In the report on Friday, Hartnett described the recent market action as “sell hubris, buy humiliation” in reference to the severe losses in industries like clean energy, social media, crypto and innovation. 

The flows data doesn’t entirely show that investors are without fear. Investors increased cash holdings by $14.9 billion, Bank of America wrote. 

Bond funds, which have come under pressure as yields rise, recorded the biggest weekly outflow since March 2021, losing $10.2 billion. High-yield corporate bonds saw the largest outflows since September 2020.

One bright spot: emerging market stocks. The group had their largest inflow in almost a year. 



Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.