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This buying trend extended to both single stocks and ETFs, with single stocks being the preferred choice.
Institutional and retail clients shifted from being sellers in the prior week to buyers, while hedge fund clients were the only group to sell after having bought in the previous week. HFs remain cumulative net buyers year-to-date.
Small-cap stocks have enjoyed inflows for 11 consecutive weeks, signaling the potential for a small-cap catch-up rally. This is notable given the significant outflows seen in the first half of the year.
BofA’s clients displayed buying activity in six of the 11 GICS sectors. The leading sectors for inflows were Technology, Health Care, and Real Estate. Conversely, Communication Services, which had led inflows the previous week, saw the most significant outflows during this period.
“Real Estate saw the largest inflows since May ’22 (11th largest in history since 2016), with inflows from all client groups. We just raised Real Estate to overweight in our S&P 500 sector views given light investor positioning, cheap valuations and favorable exposure to Early Cycle factors (current Regime Indicator phase),” BofA analysts wrote in a note.
Corporate client buybacks have slowed in recent weeks, consistently falling below seasonal trends since May. Year-to-date, these buybacks represent a smaller percentage of S&P 500 market capitalization compared to the same period in 2022.
