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Bank of America analysts noted that the firm’s clients continued to buy stocks last week, during which the S&P 500 gained 1.6% while the Nasdaq moved over 3% higher.
The second consecutive week of buying was led by interest in single stocks, while ETF selling has continued for a straight week.
“The spread between single stock and ETF flows YTD is the widest ever during the first five weeks of the year since ’08. Our view: active>passive & “outdex”>“index” in ‘23,” the analysts wrote in a client note.
Institutional clients and hedge funds were net buyers while private clients were sellers for the second straight week. Seven out of 11 sectors attracted inflows, led by Tech and Health Care with inflows in the latter the second largest since 2008.
“These sectors have also led inflows YTD despite risks we see to Tech,” they added.
On the other hand, Industrials witnessed the largest outflows, followed by Energy.
As far as buybacks are concerned, the execution is off to a strong start while BofA strategists note that not many companies have announced such plans so far.
“The number of S&P 500 announcements is half of what we have typically seen YTD over the last decade,” the analysts concluded.
