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Aggressive selling by institutional investors continued in September, pushing year-to-date outflows for the group over $300 billion as of Oct. 5. Meanwhile, hedge funds saw notable net inflows for the month as the group allocated capital toward a recovery in equities. Retail momentum slowed, however, as the group posted one of its few periods of net outflows this year.
Despite some shifts in retail and hedge fund trends, retail remains the top net buyer on a year-to-date basis, while hedge funds remain marginally negative for the year.
Energy continued to widen its year-to-date outperformance relative to other sectors over the month. However, retail investors shifted their approach to this outperformance and were net sellers during the period. Previously, retail investors were buying into the sector's strength. Institutional investors were also net sellers of energy, continuing their prior trend in the space. Hedge funds, which have alternated in recent months, were also sellers of energy in September. Profit-taking from the three investor classes combined may start to create pressure on energy's performance.
Institutional selling continued across most sectors
Institutional investors continued to decrease exposure to most sectors. They most aggressively sold industrials, which was also the largest area of selling for both hedge funds and retail investors this month.
Hedge funds made their biggest bet yet on a recovery
Hedge funds were overall net buyers for the month, with increases in some of the largest sectors in their portfolios. Healthcare was the largest increase for the group on a percentage basis, while the largest dollar inflows were in the technology sector.
While retail investors remain the largest net buyers year to date, September saw some of the most bearish activity from the group in 2022. The group posted net sales in eight out of 10 sectors, with notably aggressive selling in the industrials sector.
Data and insights for this article were compiled by Matthew Albert, Mark Buckles, and Christopher Blake from S&P Global Issuer Solutions.