A total of $151 billion went into money market funds over the last four weeks versus $404 billion in the four weeks after Silicon Valley Bank collapsed in March and the banking sector was engulfed in turmoil, the BofA report showed.
Meanwhile, investors bought $5.6 billion of bonds and pulled $7.7 billion from equity funds in the week to May 17.
The report also showed U.S. Treasuries clocking up 14 straight weeks of inflows, with investors buying $4.3 billion in the week to May 17.
They also showed a preference for investment grade bonds – which have seen inflows for seven weeks and a weekly inflow of $4.9 billion – over high yield bonds, from which investors pulled $2 billion last week.
The BofA analysts said a 60/40 portfolio, which typically allocates 60% of assets into stocks and 40% into bonds, has recorded a 28% annualized return in 2023, turning things around after a “disastrous” 2022.
A total of $1.1 billion went into tech stocks, marking a fifth week of inflows, as investors chose growth names over value. Investors took $700 million out of financial funds, while real estate investment trusts saw their largest outflows since November 2022, totaling $600 million.
Looking forward to the next 12 months, BofA said the “biggest pain trade” will be Federal Reserve interest rates at 6% rather than 3%.
BofA said its bull and bear indicator – a measure of market sentiment in which a higher reading is more bullish – jumped from 3.4 to 3.5, its highest level since March 14. (Reporting by Lucy Raitano; Editing by Amanda Cooper and Jan Harvey)
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