Retail investors sell off stocks at fastest pace in nearly 2 years

Retail investors in November sold off their stocks at the fastest pace in years amid a strong US equities rally.

Retail investors sold more than a net of $23.63 billion in stocks during the month, the largest monthly outflow for the group since the end of 2021, according to data from S&P Global Market Intelligence. Through November, retail investors have sold $58.29 billion worth of equities so far in 2023.

"We are seeing some burnout from the last few years of relatively aggressive inflows for the group," said Christopher Blake, executive director for S&P Global Issuer Solutions. "The volatility throughout this year led to some initial selling for the group in recent months, but once that trend reversed, we see retail continuing to sell even into strength."

November marked the first month since S&P Global Market Intelligence began tracking stock market investment flows that retail investors sold more than institutional investors when both groups were net sellers, Blake said.

The retail sell-off came despite a sharp rally in the US stock market. The S&P 500 rose 8.9% in November and by Dec. 12 stood at its highest point since January 2022.

Retail flows

The rise in retal outflows is likely part of a larger adjustment for the group as it finds a new level of total investment in a no-fee investing world, Blake said.

Retail investors increased selling of materials, communication services, financials, real estate and industrials stocks month over month. There was also a significant shift back into exchange-traded fund (ETF) accounts in November, which may be a sign that some retail selling was a rotation away from single-security investment and into broader investment strategies, Blake said.

Index and ETF investors bought a net $21.74 billion in stocks in November, the data shows.

Hedge fund flows

Meanwhile, hedge funds increased buying of materials stocks in November, but reversed from buyers to sellers overall, primarily shedding utilities, real estate and energy stocks.

"The group looks to be moving out of some longer-term underperforming sectors against the backdrop of broader market strength in the last few weeks," Blake said. "The group overall was notably more bearish on the market, net selling after being net buyers last month and on average over the past year. This suggests they see limited additional room for the current market rally to continue into year end."

Hedge funds sold a net of $3.91 billion of stocks in November after buying $5.56 billion in October.

Institutional flows

Institutions sold off a net $17.15 billion in November and have sold off more than a net of $227.28 billion since the start of the year.

Institutions were big sellers of energy and consumer discretionary stocks in November.

This article highlights capital flows data available from S&P Global Issuer Solutions. Data and insights for this article were compiled by Matthew Albert, Mark Buckles and Christopher Blake.

For more information on this product, please contact Christopher Blake, executive director, at christopher.blake@spglobal.com.