The ongoing trends for January show a distinctive preference for individual stocks over passive investments, according to Bank of America’s analysis of client flow trends.
Last week saw clients as net buyers of US equities, with a continued emphasis on single stocks for the fifth consecutive week, while ETFs faced outflows for the second week.
Retail inflows at the beginning of January were predominantly driven by private clients, in contrast to institutional clients and hedge funds, which maintained their status as net sellers for the eighth and third consecutive weeks, respectively.
Record-breaking inflows were observed in Communication Services and Health Care, marking the largest influx in data history since 2008 for both sectors. Communication Services has consistently experienced inflows since October.
Clients chose to sell seven of the 11 GICS sectors, notably Consumer Staples witnessing six weeks of outflows. Interestingly, Defensives garnered inflows for the third consecutive week, presenting a contrasting picture to client behavior, which involved selling cyclicals.
Despite the blackout period, corporate buybacks accelerated, surpassing seasonal levels for a remarkable ninth consecutive week. This was reflected in buybacks accounting for 0.27% of the S&P 500 market cap, exceeding the 2023 highs of 0.25% at this point.