Bank of America analysts reported a divergence in client flows during last week’s market sell-off.
In its equity client flows trend model note this week, the bank said hedge funds and institutional clients were net sellers of US equities, while retail investors stepped in as net buyers.
The fell by 2.1% last week, and BofA Securities clients were net sellers of US equities, offloading $2.6 billion. This marks the fourth consecutive week of net selling, though the outflows were smaller compared to the previous three weeks. Hedge funds were net sellers for the first time in two weeks, and institutional clients continued their four-week selling streak.
In contrast, BofA said that private clients, who had sold equities the week before, were net buyers. This indicates a growing interest among retail investors to capitalize on the dip in stock prices.
Corporate buybacks are said to have remained robust, with BofA corporate client buybacks maintaining levels similar to the previous week. These buybacks have been above typical seasonal levels for 21 consecutive weeks.
BofA added that there were notable trends in sector flows.
“Tech saw its third straight week of outflows, while Comm. Services saw its 18th straight week of inflows,” indicating a shift in investor preference within the TMT (Technology, Media, and Telecom) sectors.
The Industrials sector experienced the longest selling streak over the past four weeks, which, along with Energy, has contributed to the downtrend in Q3 estimates.
Meanwhile, BofA clients sold equity ETFs for the first time in nine weeks but showed interest in Commodity and Fixed Income ETFs. Equity ETF sales spanned six of the 11 sectors, with Financials ETFs seeing the largest outflows, while Tech ETFs attracted the most inflows.
