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Selling dominated the first trading week this year, BofA's client flows show

Published 09/01/2024, 11:56 pm
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During the recent market sell-off, Bank of America clients exhibited a shift in their investment behavior, according to the bank’s strategists.

The week saw net selling of US equities by clients, marking the first time in three weeks, with outflows amounting to $2.1 billion, the largest since July. The selling pressure was observed in ETFs, while clients remained small net buyers of single stocks.

Contrary to the typical "January effect," all three client groups— institutions, hedge funds, and private clients—were sellers.

Hedge fund clients, in particular, experienced their seventh consecutive week of outflows. Institutions and private clients also joined the selling trend, with institutions being sellers for the second week and private clients for the third week.

The technology sector led the outflows, experiencing the first outflow since November 2023 and the largest since July 2023.

On the other hand, Communication Services saw significant inflows, marking the third-largest in BofA's data history since 2008 and continuing the trend since October.

In terms of investment styles, defensive sectors saw inflows for the second consecutive week.

Analysts at Bank of America are more positive on cyclicals, and their sector views have a cyclical tilt,” according to a note.

The ETF market witnessed the largest outflow since January 2023, with outflows across all styles (Growth/Value/Blend) and large caps/broad market.

Small-cap ETFs experienced inflows, maintaining a positive trend since mid-September. Notably, most sector ETFs observed outflows, with Financial ETFs leading the way, while Consumer Discretionary ETFs saw significant inflows.

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