The month of September stuck to its ill-repute. The S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000 lost about 8.6%, 8.3%, 9.1% and 8%, respectively, in past one month (as of Sep 30, 2022). The key reasons for such underperformance were the Fed’s indication that it will continue its steep rate hike momentum to contain inflation despite the economic growth concerns.
Against this backdrop, below we highlight the asset report of September.
Ultra-Short Term Treasury Bond ETFs Won SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), iShares Short Treasury Bond ETF SHV ), iShares 1-3 Year Treasury Bond ETF (and SHY Quick Quote SHY - Free Report) iShares 0-3 Month Treasury Bond ETF (SGOV) hauled in $6.13 billion, $3.82 billion, $2.23 billion and $1.49 billion in assets, respectively.
The short-term corner of the Treasury market has been an area to watch lately, given the stock market turmoil. As such, the appeal for cash-like ETFs has been on the rise as investors seek to mitigate the risk of a decline in the stock market. Short-term bond ETFs have low-interest-rate risks.
S&P 500 In Toppers’ List SPDR S&P 500 ETF Trust ( SPY Quick Quote SPY - Free Report) , Vanguard S&P 500 ETF ( VOO Quick Quote VOO - Free Report) and Vanguard Total Stock Market ETF ( VTI Quick Quote VTI - Free Report) amassed about $1.52 billion and $3.87 billion in assets in September. Though the broader market was downbeat, equity investors probably used the buy-the-dip strategy. Vanguard Total Stock Market ETF ( VTI Quick Quote VTI - Free Report) and iShares Core S&P Total U.S. Stock Market ETF (ITOT) too amassed about $1.93 billion and $2.15 billion in assets, respectively. Floating Rate Bond ETF: A Winner WisdomTree Floating Rate Treasury Fund ( USFR Quick Quote USFR - Free Report) too fetched about $1.41 billion in assets in September. The underlying Bloomberg U.S. Treasury Floating Rate Bond Index is a rules-based, market value-weighted index engineered to measure the performance of floating rate U.S. Treasury bonds.
As the Fed is planning to hike rates faster to combat sky-high inflation, demand for floating rate bonds gained. Since the coupons of these bonds are adjusted periodically, they are less sensitive to an increase in rates compared with traditional bonds.
Junk Bonds & Corporate Bonds Out of Favor
As safe U.S. treasury bond yields shot up in September, investors’ inclination toward junk bonds fell. These bonds are of lower credit quality and may underperform (or default) if the economy slips into prolonged recession.
iShares iBoxx USD Investment Grade Corporate Bond ETF (and LQD Quick Quote LQD - Free Report) SPDR Bloomberg High Yield Bond ETF (lost about $3.68 billion and $2.29 billion in assets, respectively. JNK Quick Quote JNK - Free Report) Vanguard Short-Term Corporate Bond ETF (and VCSH Quick Quote VCSH - Free Report) Vanguard Intermediate-Term Corporate Bond Index Fund ETF (VCIT) witnessed about $1.32 billion and $1.21 billion in assets slipping through the products, respectively. Financials Fell Financial Select Sector SPDR Fund (lost about $3.5 billion in assets as the yield curve flattened in the month. XLF Quick Quote XLF - Free Report) Gold Lost Its Glitter
As the greenback gained massive strength lately, gold prices underperformed. Gold is priced in the U.S. dollar. As rates have been rising in the United States and globally, non-interest-bearing assets like gold fell out of investors’ favor. The gold bullion
ETF ( GLD Quick Quote GLD - Free Report) lost about $1.72 billion in assets.