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The gap between institutional selling and retail and hedge fund activity widened over the month of October. Selling from institutional investors continued at an aggressive pace, while both retail and hedge funds alternated between buying and selling. The activity brings net outflows for institutions above $350 billion, while retail investors remain the sole group with net inflows through Nov. 2.

Average weekly outflows for institutional investors have been just shy of $8 billion for 2022, putting the group on pace to break $400 billion in outflows by year-end if the current pace continues.

Positioning by these investor groups continues against a backdrop of weakness across all sectors except energy. The energy sector has moved even further away from the performance of the rest of the market, with year-to-date gains above 60%. Meanwhile, the remaining sectors' performances range from a decline of 7.3% for utilities to a decline of 42.4% for communication services.

Institutional decreases were seen across all sectors

Selling by institutional investors was relatively indiscriminate for the month, as the group decreased exposure to every sector by similar magnitudes. The move suggests outflows for the month were less likely a response to specific sector headlines and more risk-off activity for the entire equity market.

Hedge funds favored utilities while selling consumer goods

Sector-level activity by hedge funds did not show any clear preference toward more or less risk-prone sectors. The move suggests the month's shifts for the group were more driven by a range of strategies as opposed to widespread hedge fund preferences.

Retail investors had slight net outflows, but remain the most bullish

Over the four-week period, retail investors were buyers in two weeks and sellers in two weeks. The net activity for the month was slight selling, however, it was the least-aggressive selling for the month of the three groups. The real estate sector was a clear favorite for the group, while financials was a key source of the selling.

Data and insights for this article were compiled by Matthew Albert, Mark Buckles, and Christopher Blake from S&P Global Issuer Solutions.