Major contributors to U.S. stock market gains in the last several months saw significant outflows in the week ended Wednesday, the BofAML report said:
- Technology — $600 million, largest in 49 weeks.
- Financials — $35 million, second straight week.
- Consumer — $1.5 billion, third largest ever
The defensive utilities sector was the only U.S. stock sector to see slight inflows in the last week.
By investing style, investors withdrew $1.6 billion from U.S. growth stock funds and $1.1 billion from U.S. value stock funds, the BofAML report said. Only U.S. small caps saw inflows, at $700 million.
Investors also piled into Treasury bonds, which saw their greatest inflows in 10 weeks at $900 billion. But riskier high-yield debt posted $2.2 billion in outflows, its eighth week out of 10 of withdrawals, the report said.
That said, analysts don't expect the defensive turn to result in a large market downturn.
"This is definitely weaker U.S. equity inflows but still net positive and my sense is that positioning is still long and the VIX back at 11 shows there is still complacency," Ilya Feygin, managing director and senior strategist at WallachBeth Capital, said Friday. He estimated U.S. stock exchange-traded funds, passive investment products which have risen in popularity over mutual funds, gained $6.1 billion in net inflows since June 30.
In addition, BofAML said its proprietary Bull & Bear indicator did not trigger a "sell" signal, meaning the market still remains in a rally mode.
And while overall the bank's wealthy private clients turned more defensive, their allocation to one traditional safe haven, precious metals ETFs, has fallen to record lows, BofAML said.
Private client allocation to precious metals ETFs as % of assets under management
Source: Bank of America Merrill Lynch, BAC data