February was marked by volatility triggered by a sharp rise in long-term Treasury yields that has sparked fears of overvaluation in the high-growth and high-beta sectors. However, the appeal for cyclical stocks, which were the most beaten down during the pandemic and relatively cheaper, kept the bulls intact.
With continued progress in more vaccines, rapid vaccination rollout and the prospect of further U.S. stimulus, the economy is on the mend with swift recovery expectation. The combination of factors will result in increased industrial activity and pickup in consumer demand, thereby leading to higher demand for all types of products and services in the economy. In particular, Americans will spend on big-ticket items such as vacations and weddings, companies will go on hiring sprees, and the transition to new technologies such as electric vehicles will accelerate. Improvement in corporate earnings growth also bodes well for the stocks (read: Will March See a 'Taper-Tantrum'-Like Crisis? 6 ETF Plays). As such, ETFs tracking the stocks notched their best month of inflows on record, according to Bloomberg, as traders added almost $86 billion to those funds in February. Per etfdb, U.S. equity ETFs pulled in $88.7 billion in February – marking the second-largest monthly haul in history and behind record of $91.2 billion seen last November. Below, we have highlighted some equity funds that gained immense popularity last month and will likely to do so, given the latest encouraging development in vaccines from likes of Johnson & Johnson ( JNJ Quick Quote JNJ - Free Report) as well as upbeat manufacturing and consumer spending data: Vanguard S&P 500 ETF ( VOO Quick Quote VOO - Free Report) VOO was the most popular ETF plays last month, pulling in about $11.3 billion in capital. It tracks the S&P 500 Index and holds 509 stocks in its basket with each accounting for not more than 6.7% share. The fund is widely spread across sectors with information technology, healthcare, consumer discretionary and communication services being the top four, with double-digit allocation each. The ETF charges investors 3 bps in annual fees and trades in average daily volume of 3.1 million shares. It has AUM of $194.9 million and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. iShares Core S&P 500 ETF ( IVV Quick Quote IVV - Free Report) This fund gathered $8.3 billion in capital last month, bringing its total AUM to $249.9 billion. It also tracks the S&P 500 but is a lot larger than VOO with average daily volumes of 3.5 million. It charges the same fees as that of Vanguard product. The fund has a Zacks ETF Rank #3 with a Medium risk outlook (read: ETF Strategies to Gain From the Stimulus & Vaccine Optimism). SPDR S&P 500 ETF Trust ( SPY Quick Quote SPY - Free Report) SPY is the biggest ETF in the space with AUM of $333.4 billion and expense ratio of 0.09%. Like the other two, it also tracks the S&P 500 Index and trades in average daily volume of 56.9 million shares. The product accumulated $6.9 billion in its assets last month and has a Zacks ETF Rank #3 with a Medium risk outlook. ARK Innovation ETF ( ARKK Quick Quote ARKK - Free Report) This ETF saw inflows of $2.4 billion last month. It is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA technologies (Genomic Revolution), industrial innovation in energy, automation and manufacturing (Industrial Innovation), the increased use of shared technology, infrastructure and services (Next Generation Internet), and technologies that make financial services more efficient (Fintech Innovation). In total, the fund holds 55 securities in its basket and charges 75 bps in annual fees. The product has AUM of $23.3 billion and trades in volume of $8.9 million shares a day on average (read: 5 Stocks That Make Ark Innovation ETF Red Hot). Vanguard Total Stock Market ETF ( VTI Quick Quote VTI - Free Report) This fund has gathered $2.2 billion in capital, bringing its total AUM to $213.7 billion. It provides exposure to the broad stock market by tracking the CRSP US Total Market Index. The ETF holds a large basket of well-diversified 3640 stocks with key holdings in technology, consumer discretionary, healthcare, industrials and financials. It charges 3 bps in fees per year from investors and trades in average daily volume 4.3 million shares. VTI has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. Financial Select Sector SPDR Fund ( XLF Quick Quote XLF - Free Report) The ultra-popular financial ETF, XLF accumulated $1.9 billion last month. It seeks to provide exposure to 65 companies in the diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts ("REITs"), consumer finance, and thrifts and mortgage finance industries. The product has AUM of $35.1 billion and charges 12 bps in annual fees. It trades in average daily volume of 51 million shares and has a Zacks ETF Rank #3 with a Medium risk outlook (read: 5 ETFs to Ride On the Rotation to Cyclical Sectors). Want key ETF info delivered straight to your inbox?
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