Citi Sees Investors Favoring Large Caps Over Small Stocks

Citi says investors are adding risk in large-cap stocks while remaining heavily bearish on small caps. The bank described global positioning as increasingly one-sided in a note Tuesday.

“The dominant positioning story remains one of increasing concentration rather than broad-based risk taking,” analyst David Chew wrote.

In the United States, positioning was broadly unchanged despite stronger index performance, according to Citi. The S&P 500 drew most of the new risk flows as investors selectively added exposure.

Nasdaq positioning was stable, with long and short activity offsetting each other, Citi said. The Russell 2000 remained the most bearishly positioned index the bank tracks globally, with short exposure near extreme levels.

Citi said the macro backdrop still favors large-cap leadership. Its note points to a split in investor positioning, with new exposure flowing mainly to the S&P 500 rather than a broader group of stocks.