Five Weeks Account for a Quarter of Pros’ 2022 Stock Withdrawals
(Bloomberg) — To see just how fast investor moods have been souring recently, take a look at the fund-flow dynamic of professional fund managers.
In the five-week period that started in mid-August and ended September 7, long-only institutional investors sold $51.2 billion worth of US-traded stocks — roughly a quarter of what they dumped in the prior 31 weeks of this year, according to an S&P Global Market Intelligence analysis. The data doesn’t include last week, when a surprising inflation print stoked concerns of a Federal Reserve tightening that’s more aggressive than expected.
The anxiety has sent the S&P 500 Index 8.4% lower in the past four weeks, a rate of decline that was exceeded only twice since the pandemic, data compiled by Bloomberg show.
Even as two S&P 500 sectors — energy and utilities — bucked the broader stock-market rout and are rising in 2022, that hasn’t necessarily translated to institutions’ fund flows. They’ve sold 10 out of 11 industry sectors, led by industrials, with flows to utilities remaining flat on the year.
The broadening rout is starting to create buying opportunities, says Mark Haefele, Chief Investment Officer at UBS Global Wealth Management. He recommends “against retreating to the sidelines” — especially considering the drag on cash that higher inflation has caused and the risk of timing a return to the markets without missing out on a rebound. Excluding the best five days in the S&P 500 this year, the gauge’s loss for 2022 widens to 30% from 19%, data compiled by Bloomberg show.
The S&P 500 rose 0.2% as of 12:31 p.m. ET, inching closer to the 3,900 line that provided a floor to the stock-market rout in May. The threshold has been the S&P 500’s level with the most volume traded in the past three years, data compiled by BTIG LLC show. A drop below that level, according to BTIG’s Jonathan Krinsky, could open the door to a June low of 3,666.77.