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BOFA CLIENTS PREFERRING DOMESTICALLY ORIENTED SECTORS VS GLOBALLY EXPOSED GROUPS

BofA Securities equity and quant strategist Jill Carey Hall says that last week, with the S&P 500 index .SPX rallying 1.5%, clients were small net sellers of U.S. equities (-$0.3 billion) after buying the previous week.

"Selling was driven by institutional clients, who have sold for five weeks straight. Cumulative selling by this group YTD is the largest of any comparable period in our data history and the largest since '17 when normalized by market cap," writes Hall in her note.

She adds, "hedge funds were buyers for a second week. Private clients also were buyers and have now been buyers in 25 of the past 26 weeks (a record buying streak in our history)."

Hall says that clients sold stocks in five sectors, led by staples, financials and communication services.

With buying over a seven week stretch, consumer discretionary scored the biggest inflows. Seven straight weeks is the longest recent buying streak of any sector.

Hall notes that clients bought domestically-oriented sectors versus sold globally-exposed sectors in aggregate last week, and that clients have been bigger buyers (or smaller sellers) of domestic sectors for the last six weeks.

"Our S&P 500 valuation work suggests a historical premium for domestically-oriented vs. foreign-exposed stocks, indicating that tariffs/de-globalization are generally priced in (but the tax bill not so much)," she writes.

In terms of ETFs, Hall says clients bought equity ETFs for the first time in three weeks. Clients bought blend and value ETFs, but offloaded growth ETFs. Large/mid/small/broad market ETFs all saw inflows.

Clients sold ETFs in seven of the 11 sectors, led by tech and industrials.

Healthcare and communication services ETFs saw the biggest inflows.

(Terence Gabriel)

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