Nov 7, 2019 - Economy

Investors are getting defensive

Traders work on the floor of the New York Stock Exchange.

Traders work on the floor of the New York Stock Exchange. Photo: Spencer Platt/Getty Images

Equity investors are making a sustained move to value stocks and more defensive sectors of the market, data from Bank of America Merrill Lynch show

The big picture: Equity analysts say BAML clients are increasingly moving into health care and utilities (which saw nearly record inflows from both institutional managers and hedge funds) as well as large-cap stocks and domestically oriented sectors.

Why you'll hear about this again: In its last fund manager survey, released in mid-October, BAML analysts noted that "investors rotated into defensive equities like healthcare and consumer staples and out of cyclicals like materials and banks."

  • In a note to clients Tuesday, they said: "Value ETFs continued to see inflows for the past eight weeks, as we see a case for sustained rotation to Value once macro data starts bottoming out."

Of note: Investors took profits on equities after the S&P 500 and Nasdaq touched all-time highs last week, with "ETF inflows dwarfed by single stock outflows," that led to net selling for equities after six straight weeks of net buying.

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