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May Flash Flows: Cyclicals Keep Running to Records


Head of SPDR Americas Research

  • ETFs took in $65 billion in May, their 7th consecutive month with more than $50 billion of flows — a record streak coinciding with $548 billion of flows in those months.
  • Value ETFs had their second-highest flows ever (over $10 billion) and cyclical sectors beat defensives for the tenth month in a row.
  • Broad commodity funds and TIPS ETFs took in record flows last month, +$3.1 billion and +$3.7 billion, respectively.

Running the two-mile indoor track event requires both physical strength and a great deal of mental toughness. Not because of the distance, but because of the number of repetitive laps required — specifically at the home track I ran in high school.

To complete the two-mile, it took roughly 32 laps in a crowded, dusty gym that had the basketball bleachers running alongside it — and those were so close that if you leaned too much into your turn you might hit them.

Simply put, it was a long-distance track event that featured many laps where nothing changed. Doing something 32 times in a row can be disorienting, especially when trying to get in under 12 minutes. It required balance and discipline, as well as knowing when to change your approach — something that also required knowing what lap you were on.

A long timeframe that features constantly repeating intervals feels a lot like the current market sentiment and positioning. Ever since the vaccine timeline was established in November 2020, jumpstarting a recovery and reopening, positioning has been steadfastly cyclical.

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Bloomberg Barclays US Corporate High Yield Bond Index
The index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.

Characterized by higher price levels relative to fundamentals, such as earnings.

A market capitalization-weighted index designed to provide a broad measure of equity market performance throughout the world.

A market capitalization-weighted index designed to provide a broad measure of equity market performance covering developed market countries in Europe, Australasia, Israel, and the Far East.

S&P 500® High Beta Index
Designed to reflect the performance of the 100 highest beta stocks as measured by the beta to the S&P 500.

S&P 500® Index
A market-capitalization-weighted stock market index that measures the stock performance of the 500 largest publicly traded companies in the United States.

S&P 500® Low Volatility Index
Designed to reflect the performance of the 100 least volatile stocks as measured by standard deviation of returns.

S&P 500® Pure Growth and Pure Value Index
A style-concentrated index designed to track the performance of stocks that exhibit the strongest value or growth characteristics by using a style-attractiveness-weighting scheme.

S&P 600® Small Cap Index
A market-capitalization-weighted stock market index that measures the stock performance of the 600 smallest publicly traded companies in the S&P 1500 Index.

Characterized by lower price levels relative to fundamentals, such as earnings.

Originally Posted on June 7, 2021 – May Flash Flows: Cyclicals Keep Running to Records


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