An ongoing slowdown in sales of US stocks by institutional investors extended into August.
Institutions reduced their exposure in equity markets by a net of nearly $14.05 billion over the course of the month, down from $19.79 billion in July and lower than the average of $23.33 billion per month over the past 12 months, according to the latest data from S&P Global Market Intelligence.
While they ended the month as net sellers, institutional investors ended as net buyers of nearly $7.03 billion in equities during a single week mid-August. It was the first time since mid-June that institutions bought stocks on net during a week.
"Overall, we see the trend for institutional selling tapering off as they become more confident in the latest market rally," said Christopher Blake, executive director of S&P Global Issuer Solutions. "It's going to be difficult for that group as a whole to maintain aggressive buying over an extended period of time, but we view the pockets of buying and the reduced net selling as overall bullish signs for the market."
Hedge funds in August bought nearly $5.92 billion in stocks as that group continues to be "extremely opportunistic with market swings," Blake said.
"Particularly in an upward market trend, brief pullbacks that offer more attractive entry points to a longer-term rally have historically attracted hedge fund interest," Blake said.
Index and ETF investors, meanwhile, bought a net of $310 million in stocks in August, a massive drop from $28.09 billion bought on net during July. These flows suggest that index and ETF investors took profits in August on investments that allowed them to bet on broad themes and sectors and instead rotated capital into individual equity investments, Blake said.
12-month totals
Institutions have sold a net $279.90 billion in stocks since the end of August 2022, the data shows, while retail investors have sold $43.87 billion. Meanwhile, index and ETF investors have bought a net $103.25 billion in stocks and hedge funds have bought $21.69 billion over the past year, the data shows.
The S&P 500 increased by nearly 14% from Aug. 31, 2022, to Aug. 31, 2023.
Sector flows
In August, institutions increased the selling of consumer discretionary and communication services stocks.
Hedge funds, meanwhile, went the other way, increasing the buying of consumer discretionary and utilities stocks, while increasing the selling of real estate.
This article highlights capital flows data available from S&P Global Issuer Solutions. Data and insights for this article were compiled by Matthew Albert, Mark Buckles and Christopher Blake.
For more information on this product, please contact Christopher Blake, executive director, at christopher.blake@spglobal.com.
