Bank of America: Global equity funds see record annualized inflows of $1.4 trillion, investor sentiment bearish but few short positions

November 13 - Strategists at Bank of America Corp. said global equity funds are attracting record inflows this year, with few investors willing to short. A team led by Michael Hartnett wrote in a report that equity exposure has surged dramatically, with $1.4 trillion flowing into global funds on an annualized basis. Among them, US equity funds attracted $656 billion, tech stocks attracted $222 billion, and South Korean stocks attracted $78 billion. "These inflows represent an impressive support for the stock market, but also indicate that despite many investors currently having bearish sentiment, few are 'putting real money' into shorting or underweighting," they said.

Hartnett wrote that risk assets have struggled over the past six months "due to bullish positioning colliding with policy tightening." Nevertheless, the strategists maintain a "risk-off stance until rate hikes end and financial conditions ease," which they believe will only happen when US crude oil prices fall below $70 per barrel, the dollar reverses its recent rally, and the 10-year US Treasury yield drops below 4.5%.