According to a new report from Bank of America’s strategists, clients have been favoring exchange-traded funds (ETFs) over individual stocks this year. Cumulative inflows into ETFs have now surpassed allocations into single stocks.
During the five-day period ending on May 17, clients were net sellers of US stocks, offloading a total of $3.3 billion in shares for the third consecutive week.
This shift follows a trend where ETF inflows for the year-to-date have exceeded those into individual stocks, marking a significant reversal from earlier in the year.
The strategists noted that institutional clients were the only net buyers, besides corporates, after selling US equities in seven of the last nine weeks. Hedge funds and private clients were sellers after buying the week before.
Investors have shown 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 consistent across sectors. Industrials, consumer discretionary, and financials saw the most selling, while communication services experienced the largest inflows.
Despite a slight deceleration from the previous week, corporate buybacks have been above typical seasonal levels for ten consecutive weeks, indicating a continued appetite for stock repurchases among corporate clients.
Bank of America highlighted that year-to-date, corporate client buybacks as a percentage of S&P 500 market cap (0.41%) are higher than in 2023 (0.34%) at this time.
