By Senad Karaahmetovic
Bank of America’s clients continued to buy U.S. equities last week, in which the S&P 500 gained 2.5%, according to strategist Jill Carey Hall.
This marks the fourth consecutive week of net inflows, this time of $1.3 billion. As was the case with the three prior weeks, buying was led by private clients while hedge funds were also buyers. On the other hand, institutional clients were net sellers.
“Clients bought stocks in six of the 11 sectors, led by Consumer Discretionary and Energy. Those sectors, along with Materials and Real Estate, have seen inflows for the last four weeks. Health Care and Financials saw the biggest outflows last week,” Carey Hall told clients in a note.
BofA’s clients have continued to aggressively buy Energy stocks with inflows recorded for the last two weeks now the 3rd and 4th largest in the firm’s weekly data history since 2008.
“In aggregate, cyclical sectors have continued to see inflows while defensive sectors have continued to see outflows, which has been true most weeks since May (suggesting clients are still not positioning for a recession),” the strategist added.
The analyst also noted more signs of a potential tipping point in the assets under management (AUM) shift from active to passive.
“Indeed, we have continued to see slowing momentum in ETF inflows vs. accelerating momentum in single stock inflows for most of this year (chart below), where cumulative YTD single stock inflows are the most positive in three years vs. cumulative ETF inflows the weakest in three years,” Carey Hall concluded.