Stock ETFs Picking Up Steam – Weekly ETF Fund Flows

| February 24, 2014 | 0 Comments

fund flowsOver the last week, investors have jumped back on the US stock bandwagon.  More than $5 billion flooded back into stock ETFs, while bond ETFs saw money flow out.

ETF 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.

PowerShares QQQ (QQQ) led all ETFs with $1.3 billion in net inflows last week. 

The Qs have bounced back quickly from the January selloff.  In fact, the fund is now up 2.2% year-to-date and at a 52-week high.

QQQ tracks a cap weighted index of 100 stocks listed on the NASDAQ.  It only invests in nonfinancial stocks.  The result is a fund made up of 56% tech stocks, 20% consumer discretionary, 15% health care, and the final 9% spread over consumer staples, industrials, materials, and telcom. 

This unique fund is not a true technology ETF.  But with top holdings like Apple (AAPL), Google (GOOG), and Microsoft (MSFT), it is often viewed as a technology ETF.  

The leadership of the QQQs in performance, as well as net inflows, is an indication of investors’ bullish outlook.

In addition, the large outflow from Vanguard Total Bond Market ETF (BND) is further proof of investors’ bullish outlook on stocks. 

BND tracks an index of investment grade taxable fixed income securities with maturities of longer than 1 year.  It is a large and liquid fund.  And is often used as a proxy for the broad US fixed-income market.

As you know, stocks and bonds typically move in opposite directions.  The outflow of money from bond ETFs at the same time as money is flowing to stock ETFs is a clear indication of bullishness toward stocks.

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, Market Analysis

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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