This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

June ETF Flows: Searching for a Signal

By:

Head of SPDR Americas Research

  • Investor sentiment around non-US focused ETFs turned positive in June
  • Based on a rotation into cyclical sector-focused ETFs, investors are hopeful about reopening trends
  • Fixed income ETFs set a record monthly inflow, gathering more than $35 billion

Massachusetts is known for its difficult roadways, characterized by a predilection for five-way traffic stops and counterintuitive highways. At one point, I-93 South turns into I-95 North, and we all think this is normal. Traversing these roads is akin to trying to understand the current market: Thanks to too many narratives (on- and off-ramps) combined with partial or transient information (detour signs and temporary roadways), no one can confidently say they know what is to come next.

It’s downright difficult to get a clear signal. The GPS is constantly recalculating, and information, as well as the type of data, changes day-to-day. To truly find a signal, data on economics, fundamentals, returns and COVID-19 cases must be carefully assessed—which includes removing anomalies and hyperbole.

The latest recalculation of my internal market-related GPS shows that the month of June might be our new normal life with COVID-19. After reopening, certain states have started to curb access as case rates surge, while others are getting back to normal but with extra precautions. Economic data has improved and small businesses are able to open their doors to a new, but uncertain, form of commerce.

Geographic ETF flows: Support for non-US focused ETFs

While US funds experienced the most flows, non-US focused ETFs had inflows of more than $7 billion during June, as shown below. A closer look at the data, however, indicates the flows may have been due to a single investor moving capital rather than a broader directional trend. At the regional level, 76% of the $3.7 billion flows were from one fund. Similarly, at the single country level, 95% of the $2 billion of inflows were from one fund. That said, removing these single-investor flows still leaves the respective categories in net inflow positions, along with the broader non-US category, which indicates sentiment around the space is indeed positive.
Another sign that investors are focusing on international exposures is found in emerging market (EM) flows, as the segment broke its four-month streak of outflows. EM topped US stocks by 6.7% in June, the strongest relative performance since 2012, bolstered by a better reopening of economies, a weaker US dollar and more constructive valuations.

ETF flows by geography June 2020

Click Here to Read the Full Article

Footnote

1 Rolling three month dispersion per Bloomberg Finance L.P., as of June 30, 2020, based on daily return data from 1998 to 2020.

2 Bloomberg Finance L.P., Federal Reserve as of June 30, 2020, calculations per SPDR Americas Research.

3 Bloomberg Finance L.P. as of June 30, 2020, calculations by SPDR Americas Research. In 2020 we have already had 68 days, compared to a full-year average of 60 days historically since 1980.

Glossary

S&P 500 Index
A stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.

Originally Posted on July 10, 2020 – June ETF Flows: Searching for a Signal

Disclosures

The views expressed in this material are the views of the SPDR Research and Strategy team and are subject to change based on market and other conditions. It should not be considered a solicitation to buy or an offer to sell any security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. There is no representation or warranty as to the current accuracy of such information, nor liability for decisions based on such information. Past performance is no guarantee of future results.

Unless otherwise noted, all data and statistical information were obtained from Bloomberg LP and SSGA as of May 31st, 2020. Data in tables have been rounded to whole numbers, except for percentages, which have been rounded to the nearest tenth of a percent.

The research and analysis included in this document have been produced by SSGA for its own investment management activities and are made available here incidentally. Information obtained from external sources is believed to be reliable and is as of the date of publication but is subject to change. This information must not be used in any jurisdiction where prohibited by law and must not be used in a way that would be contrary to local law or legislation. No investment advice, tax advice, or legal advice is provided herein.

Investing involves risk including the risk of loss of principal.

Bonds generally present less short-term risk and volatility than stocks, but contain interest rate risk (as interest rates raise, bond prices usually fall); issuer default risk; issuer credit risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term securities. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.

Equity securities may fluctuate in value in response to the activities of individual companies and general market and economic conditions.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA, AL’s express written consent.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from State Street Global Advisors and is being posted with permission from State Street Global Advisors. The views expressed in this material are solely those of the author and/or State Street Global Advisors and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

trading top