By Senad Karaahmetovic
Bank of America clients were active buyers of U.S. stocks despite the S&P 500 closing the year nearly 20% lower. According to the firm's equity and quant strategists, BofA clients bought $69 billion worth of U.S. equities.
Private clients led the buying, which marks the first inflows by this group in 5 years. Institutional clients were also buying after two years of selling while hedge funds recorded the biggest outflows since 2008.
The strategists argue that the market could re-test lows in 2023.
"Lack of capitulation-like outflows in '22 combined with other signals we track suggest that the market lows may not be in – for example, our Sell Side Indicator moved closer to (but didn’t yet signal) a "Buy"," the strategists wrote in a client note.
BofA clients were mostly buying Tech stocks, followed by Communication Services. Overall, the clients were buyers in 8 out of 11 sectors, while Industrials, Financials, and Utilities generated outflows.
"Clients bought ETFs across six of the 11 sectors, with the biggest inflows into Energy. Growth/Value/Blend ETFs all saw inflows (led by Value). Despite more investor interest in small caps, flows aren't there yet: it was the only size segment to see ETF outflows," the strategists added.
As far as buybacks are concerned, the activity in this sector was understandably much slower than in 2021.