During the 7th consecutive week of equity inflows, Bank of America’s clients showed a consistent interest in U.S. equities, with net purchases totaling $1.1 billion. These inflows were primarily observed in ETFs, although there were also modest net purchases of individual stocks.
Institutional clients continued to be net buyers for a second consecutive week, while hedge funds and retail clients leaned towards selling.
Small-cap stocks continued to attract inflows, marking the 12th consecutive week of positive sentiment. After experiencing significant outflows in the first half of the year, small caps have demonstrated resilience and are now in a position to potentially catch up, according to strategists.
Clients allocated funds to stocks across a variety of sectors, with notable inflows in Financials (the largest since April), Consumer Discretionary (the largest since June), and Communication Services.
“Cons. Disc. has now seen inflows for the last 6 weeks (longest recent buying streak of any sector); we moved this sector up to overweight in our S&P 500 sector views last month,” strategists said in a report.
However, the Technology sector experienced the most significant outflows following a week of leading inflows. Cyclical sectors have been gaining momentum in terms of positive flows since early August, outpacing defensive sectors.
“We became more positive on cyclicals this spring, and our sector views (linked above) have a cyclical tilt,” the strategists concluded.