BofA says client flows point toward early signs of small flow momentum

BofA analysts weighed in on the broker’s client flows that show early signs of small cal flow momentum.

Last week, BofA’s clients were net buyers of U.S. equities (+$0.6 billion) for the second consecutive week. Clients were buying both single stocks and ETFs with both hedge funds and retail clients on the long side. On the other hand, institutional clients were net sellers of equities.

“Large and small caps saw inflows, (for the fifth and second straight weeks, respectively), while mid caps saw outflows. Following outsized YTD outflows, rolling 4-week avg. inflows into small caps are now the largest since Feb. 2022. We’ve highlighted potential for a near-term rally in small caps in part given ultra-bearish positioning/flows YTD,” they said in a client note.

As far as sectors are concerned, Communication Services and Health Care attracted the largest inflows with the former prolonging its buying streak to 9 weeks. Staples inflows were the largest in a year with Tech seeing the biggest outflows.