Risk Off Trade – Weekly ETF Fund Flows

| April 22, 2013 | 0 Comments

fund flowsToday we’re taking a look at ETF fund flows in – iShares Barclays TIPS Bond (TIP), iShares MSCI USA Minimum Volatility (USMV), PowerShares S&P 500 Low Volatility (SPLV), SPDR S&P 500 (SPY), and iShares Russell 2000 (IWM).

ETF fund flows are a valuable indicator of what traders are thinking.  It takes a lot of buying or selling to drive millions of dollars into or out of individual ETFs.

This is something traders can 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.

Let’s take a look some ETFs that led the way in net inflows and net outflows from April 15th to April 19th.

Last week it wasn’t just one ETF’s inflow that caught my eye.  It was the combined inflows into the iShares Barclays TIPS Bond (TIP), iShares MSCI USA Minimum Volatility (USMV), and PowerShares S&P 500 Low Volatility (SPLV).

Last week $361 million went into TIP, $218 million went into USMV, and $213 million went into SPLV.  That’s a total of $792 million into these three ETFs.

What do these three ETF have in common?

In a word, safety!

Whenever investors are flooding into a bond ETF and two ETFs promising ‘low volatility’, you can bet investors are running scared.  And that’s exactly what happened last week.

Not surprisingly, investors were fleeing riskier ETFs at the same time.

SPDR S&P 500 (SPY) and iShares Russell 2000 (IWM) led the way in outflows last week.  Investors pulled a whopping $3.2 billion out of SPY and IWM last week.

That’s a lot of money coming out of large and small cap stocks alike.  In fact, total outflows dwarfed inflows by a wide margin.  And it’s a clear indication that ETF investors are taking a “sell first and ask questions later” approach.

And I can’t blame investors for being a quick to pull the trigger on a decision to sell SPY or IWM.  Don’t forget, IWM is up 7% and SPY is up 10% year-to-date.  And a correction is long overdue.

Put simply, the last weeks’ fund flows look like traders positioning themselves for a stock market correction.  But the fact that investors are still putting money to work in stock funds, even if they’re ones that promise low volatility, is a sign we haven’t seen the end of the markets’ impressive rally.

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.

Good Investing,

Corey Williams

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Category: ETFs, Foreign Market ETFs, Market Analysis, What's Going On?

About the Author ()

Corey Williams is the editor of Sector ETF Trader, an investment advisory service focused on profiting from ETFs and the economic cycle. Under Corey’s leadership, the Sector ETF Trader has become one of the most popular and successful ETF advisories around. In addition to his groundbreaking service, Corey is the lead contributor to ETF Trading Research, where he shares his insights about ETFs and financial markets three times a week. He’s also a regular contributor to the Dynamic Wealth Report and the editor of one the hottest option trading services around – Elite Option Trader.

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