Investing.com -- Bank of America Securities said its clients sold US equities last week, with outflows totaling $3.7 billion. This was the second consecutive week of net outflows among BofA clients.
According to a Tuesday note, clients sold individual stocks but bought exchange-traded funds (ETFs). By size, large and mid-cap stocks saw outflows, while small caps experienced inflows.
Hedge funds, institutional investors, and retail clients were all net sellers last week, BofA notes. Hedge funds and institutional investors have now been selling for four straight weeks, while retail clients have been net sellers for two weeks in a row.
Corporate buybacks remained strong and continue to track above seasonal averages as a percentage of the S&P 500 market cap. The trailing 52-week buybacks, as a percentage of the S&P 500 market cap, reached an all-time high since 2010.
Looking ahead, BofA said that institutional client sales, linked to tax loss selling, typically rise in October ahead of the Oct. 31 deadline for mutual funds to realize capital gains.
“Indeed, this group has sold stocks for the last four weeks. Selling by retail investors typically picks up in Dec. ahead of the 12/31 cutoff for individual investors,” the note writes.
Sector-wise, eight of the 11 GICS sectors experienced outflows last week, with Technology, Financials, and Industrials seeing the most significant outflows. Technology has seen outflows in three of the last four weeks, despite positive semiconductor earnings reports last week.
In contrast, inflows occurred in Communication Services, Real Estate, and Materials, with Real Estate seeing its first inflows in nine weeks.
Consumer Staples remains the sector with the longest streak of outflows, spanning four weeks, and BofA maintains an underweight position on the sector, noting “it is lower quality than history and has weak guidance trends.”
Five of the 11 sectors saw ETF inflows, notably in Utilities, Consumer Staples, and Consumer Discretionary, despite single stock outflows in these sectors.
Energy ETFs, meanwhile, experienced the largest outflows.