Bank of America clients were net buyers of U.S. equities for a third straight week, with the buying activity coming almost entirely through exchange-traded funds (ETFs) rather than individual stocks. According to the bank's weekly flow data, clients purchased $2.3 billion of equity ETFs while selling roughly $0.1 billion of single stocks.
The buying momentum in ETFs was primarily led by institutional investors, marking the third consecutive week of inflows from that group. Private clients also added equity exposure for a fifth week in a row. Hedge funds, however, reversed course and were net sellers for the first time in eight weeks.
Flows showed a clear preference for large-cap exposure for the second consecutive week. The rolling four-week average of total large-cap flows turned positive - a shift the bank notes had not occurred since mid-December. Mid-cap and small/micro-cap segments experienced outflows at the single-stock level, yet ETFs tied to those segments attracted positive flows.
At the sector level, the standout trend was record inflows into Communication Services equities, marking a sixth consecutive week of net buying in that sector. Consumer Staples also continued to see a meaningful lift in demand, with inflows for a fifth straight week and the rolling four-week average reaching a new high for a second week running.
Technology stocks recorded inflows for only the second week so far this year, while Industrials saw net buying for the first time in nine weeks. The bank attributed the renewed interest in Industrials in part to what it described as an ISM inflection.
On the other side of the ledger, Consumer Discretionary and Financials experienced the largest outflows. The outflows from the Discretionary sector were the most sizable since March 2022.
ETF flows were broad-based across investment styles and market-cap segments. Clients purchased Growth, Value and Blend funds, and bought small-, mid- and large-cap ETFs. Equal-weighted ETFs registered their largest inflows since the bank began tracking more granular ETF data in August.
Within the ETF universe, cyclical exposures outpaced defensive ones. Buying was recorded in eight of 11 sectors, led by Financials and Technology. By contrast, defensive sector ETFs - including Staples, Health Care and Utilities - saw outflows.
Corporate share repurchase activity among the bank's corporate clients moderated week over week and has been tracking below seasonal averages for much of the fourth-quarter earnings season. The trailing 52-week total of buybacks as a share of market capitalization sits at its lowest level since December 2023 and remains below the long-run average covering the period since 2010, the bank reported.
Contextual notes - The bank's flow data highlights a rotation into ETF vehicles and large-cap exposures, driven by institutional demand and a continued appetite among private clients. Simultaneously, buyback activity from corporate clients has eased relative to seasonal norms and longer-term averages.