Most investor groups shed stocks in June as equities rally

Institutions, hedge funds and retail investors all sold their stock holdings in June as an ongoing rally in equities continued through the month.

The three groups sold a net total of nearly $31.90 billion in June as the S&P 500 climbed about 3.5%, extending its 14.5% climb since the end of 2023, according to the latest S&P Global Market Intelligence data. Meanwhile, index and exchange-traded funds bought a net $11.39 billion in stocks in June, increasing their net position in stocks by nearly $70.10 billion since the end of 2023.

"The old adage of 'sell in May and go away' may be in full effect," said Thomas McNamara, director for Investor Relations Solutions with S&P Global Market Intelligence. "To support this theory you are seeing outflows from actively managed money and inflows into Index/ETF. This suggests that investors are not looking to move capital to the sidelines but rather buy the market and let it ride during the summer."

Institutional flows

While institutions sold off a net $10.88 billion in stocks in June, this was well below the nearly $19.27 billion the group has sold on average each month over the past year and the $30.94 billion sold off in May alone.

Institutions bought materials and consumer discretionary stocks, reversing selling these sectors in May.

The shift in consumer discretionary could be an "inflation proxy play" as inflation remains elevated, McNamara said.

"Consumer discretionary is the sector most closely tied to inflation and the psychology of how Americans spend their money," McNamara said. "This is good news for the consumer and institutional investors may see this as a solid entry point into the sector anticipating the space outperforming the broader market going into the second half of the year."

Hedge fund, retail flows

Hedge funds sold a net $9.30 billion in June, up from the nearly $1.96 billion sold in May. Hedge funds have averaged buying about $1.57 billion in stocks each month over the past year.

Retail investors sold a net $11.69 billion in June, up from the $6.36 billion sold off in May and the 12-month average of $8.78 billion.

Retail investors and hedge funds boosted their selling of materials stocks in June, more than any other sector, mainly due to its lackluster performance, McNamara said.

"Profit taking was the leading factor in the outsized selling relative to May by retail and hedge fund investors," said McNamara, who pointed out that seven of 11 equity sectors closed at new highs in June. "This may be a triggering factor in their decisions to secure profits as we continue to move into the summer months."