Mom-And-Pop Investors Are Dumping Stocks, But Hedge Funds Are Swooping In

Every week, BofA equity strategist Savita Subramanian provides an update on what her clients are doing in the market.

According to Subramanian, "private clients" (individual investors) just sold the most stock since late December, when fears over the fiscal cliff were weighing on markets.

Meanwhile, hedge funds are buying.

"Hedge funds were net buyers of all three size segments last week, while institutional and private clients were net sellers of all three," writes Subramanian.

Below is Subramanian's take on the activity among private clients last week:

BofAML private clients—who have been the sole net buyers of US stocks this year— have begun to take profits as the S&P 500 continued its ascent. This group has now sold stocks in three of the last six weeks, after near-record net buying earlier this year.

As private clients have been the biggest net sellers of US stocks post-crisis, and tend to have stickier flow trends, we continue to monitor their flows to determine if they have truly re-entered the market or will once again become net sellers of stocks for an extended period.

The chart below shows total flows into and out of the stock market in 2013 based on client type. (The green line shows private client flows, while the blue line shows hedge fund flows.)

Below are the sectors that hedge funds bought last week.

Subramanian notes, "Hedge funds’ net buys of Consumer Discretionary and net sales of Utilities last week were the largest in our data history."