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Hedge funds led equity inflows in 2023, BofA's client data shows

Published 01/03/2024, 06:40 AM
Updated 01/03/2024, 06:42 AM
© Reuters.  Hedge funds led equity inflows in 2023, BofA's client data shows

In 2023, BofA Securities clients witnessed another substantial year of equity inflows, collectively netting $66 billion in US equities.

A notable trend emerged as hedge funds led the buying, marking their first inflows since 2019. However, private clients took the opposite stance, becoming the largest sellers and experiencing the most significant outflows since 2019, paralleled by institutional clients.

Corporate buybacks gained momentum, outpacing 2022 both in absolute terms and as a percentage of the S&P 500 market cap. Although showing acceleration, these buybacks have yet to recover fully to pre-COVID levels.

Tech and TMT stocks took center stage, with clients predominantly buying stocks in seven out of the 11 sectors, with Technology and Communication Services leading the pack.

Conversely, sectors such as Industrials, Energy, Staples, and Utilities experienced outflows, particularly Industrials, which recorded the most substantial cumulative outflow since 2008.

As far as last week’s flows are concerned, the holiday period witnessed a slight shift as clients became small net sellers of US equities during a quiet week.

Moreover, the "Tax Loss Carryforward" phenomenon was evident in TLC flows, with institutional clients rebounding post-October, while private clients leaned towards selling in December but were significant net buyers in January.

BofA’s clients sold seven out of the eleven sectors, primarily shedding Consumer Discretionary and Health Care, while maintaining a consistent trend of buying Communication Services for the ninth consecutive week.

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