Q’s and Mid-Caps Lead Inflows – Weekly ETF Fund Flows
Weekly ETF Fund Flows
Stocks reached record highs last week. Amazingly, the S&P 500 has advanced 10% so far this year to a high of 2,011.
The strong performance for stocks is helping drive money into stock ETFs.
ETF inflows of around $3 billion last week pushed total assets closer to the $2 trillion mark. But there’s still some work to be done…
There’s currently $1.91 trillion in US listed ETFs. Fund flows will need to accelerate if we’re going to reach the $2 trillion mark this year.
Fund flows are a valuable indicator of what traders are thinking. It takes a lot of buying or selling to drive millions or even billions of dollars into or out of individual ETFs.
Fund flows are something traders use to find trends and gauge investor sentiment. And it can help you pinpoint which ETFs could be next to make a big move higher or lower.
The iShares Core S&P Mid-Cap (IJH) and the PowerShares QQQ (QQQ) led all ETFs in net inflows last week. IJH had $1.3 billion in net inflows while the Q’s collected $593 million in new money.
It’s a good sign to see money flowing into the Q’s and mid-cap ETFs. These funds hold stocks that are riskier and more volatile than the large-cap ETFs like the S&P 500.
These funds are typically used by bullish traders that are looking for bigger returns than large-cap stocks will deliver.
But that’s not the only reason money is flowing into the Q’s… the top holding in QQQ is Apple (AAPL). It’s a safe bet some investors are going long APPL through ETFs like QQQ.
The ETFs leading the way in net inflows are clearly one that point to investors that are bullish and willing to take on risk even with stocks near all-time highs. What’s more, the ETFs that were hit the hardest with net outflows over the last week point to the same thing.
iShares 1-3 Year Treasury Bond (SHY) and iShares 3-7 Year Treasury Bond (IEI) were two ETFs hit with large outflows last week. SHY lost $1.0 billion and IEI lost $668 million.
Here’s the thing…
Short-term traders are dumping ETFs that hold US Treasuries before the US auctions $61 billion of notes and bonds this week. The influx of new debt is expected to temporarily boost yields as the market absorbs the new debt into the system.
But many big-investors that trade, hold, or short government debt have been wrong about interest rates on US Treasuries. Many analysts have cut their year-end forecast for the 10-year Treasury from around 3% to 2.8%.
I wouldn’t be surprised to see a large influx of money back into SHY and IEI later this week.
That wraps up this week’s ETF fund flows…
Keep in mind, there’s a lot of information about ETF fund flows. And it can be a very useful tool as long as you know what you’re looking for.
Category: ETFs, Market Analysis
