BofA equity client flows - 2024 wrap

Investing.com -- BofA Securities said that client net purchases of US equities in 2024, measured as a percentage of the S&P 500’s market cap, hit their highest levels since the 2008 financial crisis.

Both single stocks and exchange-traded funds (ETFs) saw strong inflows, with corporations emerging as record buyers. In contrast, institutions, hedge funds, and private clients largely favored ETFs but were net sellers of individual stocks.

Corporate stock buybacks hit record levels, marking the highest in BofA’s data history since 2008. Buybacks accounted for 0.46% of the S&P 500’s market cap, significantly exceeding the historical average of 0.28%.

According to BofA’s report, clients directed their investments into five of the 11 sectors, with Communication Services and Technology leading the way.

Financials and Industrials experienced the most significant outflows, with Financials seeing their largest outflows since the sector's split from Real Estate in 2016.

“Tech, Consumer Discretionary and Utilities were the three sectors to see both single stock and ETF inflows,” BofA’s report reveals. “Financials, Health Care, Energy and Staples saw stock+ETF outflows.”

By style, Growth-focused ETFs drew more interest than value ETFs, although blended ETFs saw the largest inflows overall.

In the most recent week, BofA clients bought US equities for the ninth consecutive week, with inflows totaling $2.1 billion.

Private clients extended their buying streak to a fourth week, diverging from the usual trend of December selling for tax-loss harvesting. Meanwhile, institutional and hedge fund clients continued to sell for the fourth consecutive week and the first time in five weeks, respectively.

"Buying was driven by ETFs, while single stocks saw outflows,” the report states.

Sector-wise, clients sold stocks across eight of the 11 sectors during the week, with Technology and Consumer Discretionary leading the declines – a notable shift given that both sectors had been among the largest inflow recipients earlier in the year. Communication Services, Energy, and Real Estate also saw net selling.

Looking ahead, January has been the strongest month for client equity inflows, with net buying recorded in 12 of the past 16 years. BofA points out that January “has also been the only month besides May where clients bought both stocks and ETFs, on average.”

Private clients typically lead January’s buying, making it the only month where they are consistently net buyers. In 2024, however, they purchased equities in five other months, including December.

Institutional and hedge fund clients have generally sold US equities during January, following established seasonal patterns.

Source: Investing.com