Stock exchange traded funds may continue their forward advance next year as the smart money remains largely bullish going in to the new year.
Bank of America Merrill Lynch sees hedge funds as “trend bullish” on the equities market as large money managers that focus on stacks are 36% net long, or in line with benchmark positioning of 35% to 40%, reports Lawrence Delevingne for CNBC.
Additionally, BofA found macro hedge funds that bet on broad macroeconomic trends were also adding bullish bets on the S&P 500 and Nasdaq.
“Technicals are bullish and [data averages suggest]longs may increase further,” according to the Ban of America report.
Year-to-date, S&P 500 ETFs, including, the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard S&P 500 ETF (NYSEArca: VOO), have increased about 14.6%. SPY has attracted $22.1 billion in net inflows so far this year, IVV added $9.1 billion and VOO brought in $10.1 billion, according to ETF.com data. [U.S. ETF Assets Hit $2 Trillion Milestone]
The Powershares QQQ (NasdaqGM: QQQ), which tracks the NASDAQ-100, gained 20.7% year-to-date. However, QQQ saw $11.9 billion in outflows so far this year.
Additionally, Appaloosa Management’s David Tepper points out that the current market condition is shaping up similarly to what happened prior to the 1999 market rally.