Investing.com -- Bank of America Securities said its clients sold US equities last week, offloading $3.9 billion following a near-record buying spree the previous week.
While clients sold individual stocks, they increased purchases of exchange-traded funds (ETFs). Mid and small caps experienced outflows, while large caps saw inflows.
All three major client groups—institutions, hedge funds, and private clients—were net sellers.
BofA said institutional clients led the selling, offloading equities for the first time in two weeks, while hedge funds sold for the first time in four weeks. Private clients were net sellers for the third consecutive week, marking their largest weekly outflow since November 2023.
Looking ahead, institutional clients could increase stock sales as the October 31 deadline approaches for most mutual funds to realize capital gains, according to BofA strategists. This group has been a net buyer month-to-date but turned into sellers last week.
"Our flow data suggests evidence of tax loss selling by institutional investors in Oct. (peak outflows) vs by retail investors in Dec. ahead of the 12/31 cutoff for individual investors,” BofA’s note states.
Clients sold equities in seven of the 11 sectors, with the largest outflows in Financials, Staples, Tech, and Health Care. Financials experienced the biggest weekly outflow since July. On the other hand, Communication Services recorded the largest inflows, maintaining its lead year-to-date.
Real Estate has now seen six straight weeks of outflows, although it remains favored for income and quality. Meanwhile, Energy has witnessed outflows in 12 of the past 14 weeks, as BofA recently downgraded the sector to Market Weight, citing unfavorable oil supply/demand dynamics and weak earnings revisions.
Corporate client buybacks remained strong, though they slowed last week, continuing to outpace seasonal trends as a percentage of S&P 500 market cap.
Meanwhile, ETF inflows were noted across most styles (Blend, Value, and Growth) and in most size segments (large, small, and broad market), although mid-cap ETFs saw outflows.
Only three sectors—Real Estate, Utilities, and Communication Services—experienced ETF inflows, while Consumer Discretionary ETFs faced the largest outflows.