Stock Funds See Largest Exodus On Record

Barring a Christmas miracle, 2022 will be the worst year for US equities since 2008.

For those of you who were too young to care about markets 14 years ago, allow me to reiterate that 2008 was every bit as harrowing as your elders insist it was, where “elders” means people over 35.

With the end of the calendar mercifully approaching, some investors are likely taking losses for tax harvesting just as rebalancing flows following gains for stocks in October and November likewise pressure shares.

With the above in mind, note that stock funds saw their largest outflow on record during the latest weekly reporting period, when nearly $42 billion hit the exits.

The exodus from passive funds was nearly $28 billion, also a record, while $17.2 billion fled US value funds, the most for any week in history — or at least in the history of the data series.

That’s all according to EPFR figures, parsed and presented by BofA’s Michael Hartnett in the final 2022 edition of his popular weekly “Flow Show” series.

As Hartnett bid 2022 farewell, commodities were up 25.5%, the dollar nearly 9% and cash 1.3% for the year, while gold, junk, IG credit, government bonds, equities and crypto were nursing losses of 1%, 13%, 16%, 18%, 17% and 70%, respectively.

It was a year history books will remember, and a year investors would rather forget.

For what it’s worth, BofA’s pseudo-famous “Bull & Bear Indicator” sat at 3.0 as of December 22, down slightly from the prior week, but still above “Extreme Bear” territory which, during more normal macro conditions, can be a contrarian “buy” signal.

The indicator flatlined at 0.0 on several occasions in 2022. In some cases, that presaged a tactical buying opportunity, but even for the most adept traders, this was a difficult year to navigate.