This year has been a big one for the technology sector, and now we're getting data on just how quickly investors are piling into this already crowded area of the equity market.
Investors ranging from institutional accounts to retail clients plowed about $US1 billion into tech stocks during the past week, pushing inflows to the highest annualised pace in 15 years, according to a Bank of America Merrill Lynch report. Overall, equities saw $US8.9 billion in outflows during the period, the bank said.
"Tech mania: tech inflows annualising strongest in 15 years," the BofA team, led by chief investment strategist Michael Hartnett, wrote in the note to clients on Friday. What's more, 30 per cent gains in Facebook and Apple have continued to help the rally, but 84 per cent of technology stocks have seen positive returns this year.
Companies such as Apple and Amazon.com are the five largest contributors to the S&P 500 Index's rally this year, adding more than 50 of the 126 points higher, according to data compiled by Bloomberg.
One reason for the inflows could be hedge funds returning to the tech sector. Regulatory filings show they were net sellers of a combined 7.5 million shares of Apple, Amazon.com and Alphabet in the first quarter. Those sitting on the sidelines have missed out on dramatic upside in 2017, with the five biggest American companies by value, which also includes Facebook and Microsoft, jumping an average of 26 per cent this year.
"The longer it takes the economy and yields to pick up, the greater risk of tech mania," the analysts wrote, adding that the Nasdaq Internet index is on pace for a stunning 75 per cent gain for the year.