US-based stock funds experienced two-week outflows of $21.1 billion, the sharpest since December 2022, Bank of America strategists said Friday.
Based on data from EPFR Global, BofA indicated that $4.1 billion left US equity funds in the week ending April 17.
Analysts noted that during the first quarter, the prevailing sentiment was "good news = good," but this has shifted to "good news = bad" as the quarter progresses.
Citing Bank of America's Global Fund Manager Survey (FMS) for April, investor optimism is at its highest since January 2022, strategists highlighted. This surge in bullish sentiment comes just as the certainty of a rate cut diminishes, no longer seen as a guaranteed market catalyst.
Meanwhile, global stock funds saw redemptions of $9.1 billion, while cash funds recorded a massive withdrawal of $159.8 billion.
Conversely, bond markets observed inflows, with total additions of $5.7 billion. Investment grade bonds specifically saw continued interest, attracting $3.8 billion in inflows for the 25th consecutive week.
However, high-yield bonds faced a significant pullback with $2.3 billion flowing out, the largest weekly outflow since October. Emerging market debt enjoyed its third week of inflows.
European equity funds extended their streak of outflows to 16 weeks, with a withdrawal of $1.8 billion. Japanese stock funds also experienced outflows, with $600 million leaving in the second consecutive week of redemptions.
In terms of investment style, US large-cap funds saw outflows of $1.2 billion, small-cap funds $1.7 billion, and both value and growth funds each recorded outflows of $2.2 billion.
In the sector-specific landscape, technology funds led with inflows of $500 million, while consumer and healthcare sectors faced the largest outflows, with each losing $700 million.