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Investing.com -- In its latest equity client flow trends note, Bank of America analysts revealed a notable divergence in equity flows, with "Institutional selling accelerat[ing] vs hedge funds & retail buying."
Last week, despite the S&P 500 rising 1.5%, BofA’s clients were "modest net sellers of U.S. equities," driven by single stock sales, though ETFs saw inflows.
The selling was primarily fueled by "institutional clients, who have sold for five weeks straight."
BofA states that "Cumulative selling by this group YTD is the largest of any comparable period in our data history and the largest since ‘17 when normalized by market cap."
In contrast, "Hedge funds were buyers for a second week," and "Private clients also were buyers and have now been buyers in 25 of the past 26 weeks (a record buying streak in our history)," said the bank.
Corporate client buybacks also "accelerated week-on-week and were above typical seasonal levels for the first time in four weeks."
Clients divested from stocks in five sectors, with "Staples," "Financials," and "Comm. Services" leading the outflows.
Conversely, "Consumer Discretionary saw the biggest inflows, with inflows for 7 straight weeks (the longest recent buying streak of any sector)."
A preference for domestically oriented sectors over globally-exposed ones was also observed, with clients being "bigger buyers (or smaller sellers) of domestics for the last six weeks."
BofA’s valuation work suggests that tariffs and de-globalization are largely "priced in" for domestically-oriented stocks.
In the ETF space, clients reportedly bought for the first time in three weeks, favoring "Blend and Value ETFs" while selling "Growth ETFs."