Bank of America: Institutional demand drives resurgence of individual stock capital inflows

Investing.com - U.S. banks’ data shows that last week, institutional investors became the main drivers of stock buying, with individual stock fund inflows resuming after a brief pause. According to the bank’s weekly client fund flow data, individual stock inflows totaled $2.7 billion, marking the first inflow in four weeks.

In contrast, exchange-traded funds (ETFs) experienced an $800 million outflow after four consecutive weeks of inflows.

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U.S. banks note that so far this year, clients have net sold about $14 billion worth of individual stocks while buying approximately $6 billion in stock ETFs.

Jill Carey Hall, a strategist at U.S. banks, said that institutional investors led last week’s trading activity. She wrote, “After two weeks of selling, institutional clients drove the buying (the largest inflow since late November).”

Private clients also bought net, with seven of the past eight weeks showing stock purchases. Meanwhile, hedge funds moved in the opposite direction, recording a second consecutive week of net selling.

Fund flows also focused on large-cap companies. Based on combined activity in individual stocks and ETFs, large-cap stocks were the only sector to see inflows, reversing two weeks of outflows.

Small-cap companies continued to face pressure, with small and micro-cap stocks experiencing outflows for the fifth consecutive week. U.S. banks pointed out that after a large inflow at the end of last year, the four-week rolling average of fund flows in these sectors is now at its most negative level on record.

By sector, clients bought stocks in 7 out of 11 sectors, led by communication services and technology. The communication services sector has seen inflows since late December and attracted the largest inflow of the year so far.

Energy stocks also saw buying for the first time in five weeks, although these purchases occurred before the recent escalation of Middle East conflicts.

On the other hand, the financial and non-essential consumer sectors experienced the largest outflows. The financial sector has seen eight consecutive weeks of outflows, while non-essential consumer stocks have been sold for five straight weeks.

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