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Retail investors and hedge funds help push market higher

Capital flows data will be available on Capital IQ Pro through the end of 2022. For more information on this and other S&P Global Issuer Solutions products, please contact Christopher Blake, executive director, at christopher.blake@spglobal.com.

In the equities market rally that began in July, retail investors and hedge funds have been key sources of buying while institutions continued to pare back exposure.

Through Aug. 3, retail investors have been net year-to-date buyers of $24.7 billion in equities. Hedge funds are net sellers over the same period for $14.1 billion, though in the latter part of July the group moved strongly into positive territory. Meanwhile, institutional investors reached a net outflow of $221.2 billion over 2022, according to S&P Global Market Intelligence data.

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The shift in hedge fund activity, coupled with renewed bullish interest from retail investors, helped to offset the institutional sell-off, which has largely driven 2022 declines.

Despite the move higher in July, all but two S&P sectors remain in negative territory for the year. Through Aug. 9, energy remains a key outperformer in the market with utilities moving into marginally positive territory in recent weeks.

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Institutional investors were net sellers from July 6 to Aug. 3 in all but one sector: healthcare.

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Over the period, institutions sold a net $19.4 billion with consumer goods and financials leading outflows. That was a slight slowdown compared to the prior month, as institutions had their first net inflow week of the year during July 13-20.

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Retail investors buying the energy rally

Retail investors bought $12.2 billion from July 6 to Aug. 3, the top buyers over that time frame. The group added to all sectors but one, with energy seeing the largest increase.

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Hedge funds were relatively flat over the month, although the group added $7.6 billion from July 27 to Aug. 3 as the market rallied. Utilities were favored purchases for hedge funds as the sector moved into positive territory for the year.

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