Bank of America’s clients have favored exchange-traded funds (ETFs) over individual stocks this year, with cumulative inflows into ETFs now exceeding allocations into single stocks, strategists at Bank of America said in a new report.
Per the note, clients were net sellers of US stocks for a third consecutive week, offloading a total of $3.3 billion of shares during the five-day period ended May 17.
The shift comes after ETF inflows for the year-to-date have surpassed those into individual stocks, a marked reversal from earlier in the year.
“Institutional clients were sole net buyers, (besides corporates), after selling US equities in seven of the last nine weeks,” strategists noted.
“Hedge funds and private clients were sellers after buying the week before,” they added.
Investors showed an interest in all size segments, purchasing mid-cap stocks for the first time in four weeks, large-cap stocks for the second consecutive week, and small-cap stocks for the sixth week in a row.
However, the selling was not uniform across sectors. Industrials, consumer discretionary, and financials led the selling, while communication services experienced the largest inflows.
Corporate buybacks, though slightly decelerated from the previous week, have been tracking above typical seasonal levels for ten consecutive weeks, pointing to a sustained appetite for stock repurchases among corporate clients.
“YTD, corp. client buybacks as a percentage of S&P 500 market cap (0.41%) are above '23 highs (0.34%) at this time,” BofA highlighted.