The Bank of America said, in a recent report, that investors pumped $123.1 billion into cash funds in the week ending Wednesday, January 3, which represents the largest inflow into those funds since March 2023. The bank, citing EPFR Global data, believes this percentage is a historical record if the flows of the first week of the year are included.
The shift, which the bank said was “typical” for the first week of the year, comes on the heels of 2023’s record annual inflow of cash of $1.3 trillion, as risk-averse investors fled to safe-haven assets and rising interest rates reduced investor demand for stocks, reports Al-Anba daily.
Citing data from fund flows and asset allocation data provider EPFR, Bank of America said investors bought $10.6 billion in bonds and $7.6 billion in stocks, but sold $0.8 billion in gold.
Bank of America added that this is the second week in a row in which it witnessed inflows into stocks, as eight of the past ten weeks witnessed inflows totaling $82 billion.
The Standard & Poor’s 500 and Nasdaq Composite indices ended the first week of 2024 with a significantly negative performance, as the Standard & Poor’s 500 recorded its worst weekly performance since late October, while the Nasdaq suffered its worst week since late September.
Energy stocks witnessed exits for the seventh consecutive week, and the largest since July 2023, with a value of $1 billion. Small-cap American stocks recorded a weekly inflow of $2.3 billion, which is the fifth weekly inflow in a row. In this context, the bank recommends buying stocks in emerging markets and selling American stocks in 2024.