Bank of America strategists highlighted the largest equity inflows since October despite big retail outflows.
Last week, when the S&P 500 gained 1.6%, BofA clients were net buyers of U.S. equities with the biggest inflows since October (+$4.4 billion). The strategists added that both stocks and ETFs attracted inflows, led by the former.
Once again, large-cap stocks attracted the biggest chunk of inflows.
The strong net inflows come despite the continued selling from retail investors, who were sellers for the 8th consecutive week and remain the biggest sellers year-to-date.
“Rolling 4-wk. avg. sales by retail are the largest since Oct. ‘21 and close to a two-standard-deviation event. Our GWIM survey and FA FAQs note suggest heightened levels of sideline cash and shifts into bonds/cash from equities this year,” the strategists said in a client note.
”While retail flows have generally not been a near-term contrary indicator at extremes, we find that the S&P 500 was up more than avg. over the next 1/3/6 months four of the last five times that we saw a -2 st. dev. event in retail flows since ‘09 (with avg. 1/3/6 mo. S&P returns of 2%/4%/8%).”
Sector-wise, Tech and Communication Services attracted the biggest inflows, signaling a risk-on trading environment.