First client outflows from U.S. equities in four weeks – BofA

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Outflows were recorded in both stocks and ETFs with BofA clients mostly getting out of the cyclicals and into the defensives.

“Outflows were entirely from large caps, as clients bought small and mid caps for a second consecutive week. Sentiment in small caps has been poor YTD, with record annualized outflows since the GFC,” the analysts said in a client note.

All three client groups – Institutional, hedge fund, and retail – were selling stocks last week. The selling activity was the highest in the retail sector, which sold equities for the 7th consecutive week.

“Clients sold stocks across five of the 11 sectors, led by Cons. Disc. (4th straight week of outflows) and Industrials. Rolling 4-wk. avg. outflows from Cons. Disc. are the most negative in 13 months,” the analysts added.

In the meantime, Health Care inflows continued on the back of solid Q1 results.

“We are marketweight Health Care given strong fundamentals and defensiveness, but crowding is a risk,” the analysts further noted.

Overall, they note that defensive sectors have continued to attract inflows while cyclicals are seeing outflows given weakening macro data and debt ceiling concerns.