Institutional investors were the primary force behind equity purchases last week as inflows into individual stocks resumed after a short pause, according to Bank of America.
Based on the bank’s weekly client flow data, investors directed $2.7 billion into single stocks, marking the first week of inflows in the past four weeks.
At the same time, equity exchange-traded funds (ETFs) experienced $0.8 billion in outflows following four consecutive weeks of inflows.
Since the start of the year, BofA said its clients have been net sellers of individual stocks by roughly $14 billion while allocating about $6 billion into equity ETFs.
Institutional investors led the buying activity during the week, according to BofA strategist Jill Carey Hall. “Buying was driven by institutional clients (biggest inflows since late Nov.) following two weeks of selling,” she wrote.
Private clients were also net buyers and have added to equities in seven of the past eight weeks. Hedge funds, however, moved in the opposite direction, posting net sales for the second week in a row.
The inflows were concentrated primarily in larger companies. Large-cap equities were the only market-cap category to register inflows when combining stock and ETF activity, reversing the outflows recorded in the previous two weeks.
Smaller companies continued to experience pressure, with both small- and micro-cap stocks recording outflows for a fifth consecutive week. BofA noted that the rolling four-week average for flows into these segments is now the most negative on record, following heavy inflows toward the end of last year.
From a sector perspective, investors bought stocks in seven of the eleven sectors, led by Communication Services and Technology. Communication Services has attracted inflows since late December and has recorded the largest cumulative inflows so far this year.
Energy stocks also saw buying activity for the first time in five weeks, although those purchases occurred before the latest escalation of tensions in the Middle East.
Meanwhile, Financials and Consumer Discretionary posted the largest outflows. Financial stocks have now recorded eight consecutive weeks of outflows, while Consumer Discretionary has experienced five straight weeks of selling.