Bank of America (BofA) reported that investors pulled significant funds out of U.S. equities last week, marking the largest equity ETF outflows since January 2024, as sentiment showed clear signs of “large-cap fatigue.”
According to BofA, clients were “net sellers of U.S. equities for the 4th straight week,” with “sales of both single stocks (-$0.8bn) and equity ETFs (-$2.2bn; first outflows since April/biggest outflows since Jan. 2024).”
The report showed that all major client categories turned net sellers, led by hedge funds, which posted their “4th straight week of outflows, with rolling 4wk average outflows at record levels.” Institutional investors sold for a third consecutive week, while private clients offloaded holdings for the fifth time in seven weeks.
The bank noted that the selling pressure was “chiefly in large caps after record large cap outflows the prior 2 weeks.” Mid-caps also saw withdrawals, while “clients bought small caps,” the only segment showing consistent inflows since the Jackson Hole symposium.
Sector performance was uneven, with BofA highlighting “continued Financials outflows” as investors sold stocks across five of eleven sectors, “led by Financials (7th week of outflows)” and Communication Services. The report added that “rolling 4-wk average Financials flows are the most negative since mid-November amid a weakening job market and investor concerns over credit.”
On a more positive note, “Tech saw the largest inflows, followed by Real Estate/Materials,” indicating renewed interest in sectors benefiting from AI adoption and infrastructure demand.
ETF flow data also revealed a rotation in investment styles, as “clients bought Blend & Value ETFs vs. sold Growth ETFs for a 3rd week.”
In its latest sector allocation update, BofA’s U.S. Strategy team said it “raised Health Care to overweight & lowered Utilities to underweight,” reflecting shifting expectations for sector performance heading into year-end.
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