Bank of America Securities reported that U.S. equity markets saw a shift in client activity last week, with overall flows turning negative for the first time in three weeks. According to the bank’s Tuesday note, $1.6 billion in outflows from individual stocks outweighed $1.2 billion of inflows into equity ETFs.
The selling was primarily driven by hedge funds and private clients. Hedge funds reduced positions for the first time in three weeks, while private clients cut exposure for the third time in four weeks after being steady buyers through much of the year.
Institutional investors, however, continued to add to positions, extending their buying streak to seven consecutive weeks after having largely stayed on the sidelines earlier in 2025.
Across size categories, clients trimmed exposure broadly but showed net demand for large caps when single-stock and ETF flows were combined. Small- and mid-cap ETFs saw outflows, while broad market and large-cap ETFs drew fresh inflows.
Corporate buybacks also gained pace last week, though the rolling 12-month figure relative to market capitalization has moderated since peaking in March.
By sector, investors sold equities in eight out of eleven groups. Technology posted its first outflows in three weeks, while Financials registered withdrawals for a fourth week in a row. On the other hand, Communication Services stood out with the strongest inflows, marking a five-week run and reaching their highest rolling average since March. Real estate and Staples also attracted buying interest as investors rotated toward yield-oriented sectors ahead of the Federal Reserve’s policy decision. BofA highlighted that the four-week average inflows into real estate reached a 14-month high, with its strategy team maintaining an overweight stance on the sector.
ETF activity remained resilient overall, with inflows across blend, growth, and value strategies for the third consecutive week. Notably, big tech ETFs attracted their largest inflows since September, even as individual technology stocks faced selling pressure. Clients also showed demand for dividend-focused ETFs and those tied to options income strategies.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.