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ETF Asset Report for October: S&P 500 & Treasuries Top

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After a downbeat September, October, too, remained depressed for Wall Street. High oil and gas prices, still-high inflation, and the Fed’s policy tightening spree, along with the resultant rise in bond yields, kept the market volatile.

The S&P 500, the Dow Jones and the Nasdaq have lost 2.8%, 1.5% and 3.9% in the past month (as of October 30, 2023) due to rising rate worries. U.S. benchmark treasury yield started the month at 4.69%, reached a high of 4.98% on Oct 19 and was at 4.88% on Oct 30. Apart from higher rates, there was heightened geopolitical crisis due to the war between Israel and the Gaza-based militant group Hamas. This has sent oil prices higher.

Meanwhile, the U.S. GDP data for Q3 came in upbeat. The United States witnessed substantial economic growth in the third quarter of 2023, with the real gross domestic product (GDP) growing at an annual rate of 4.9%, beating economists’ expectations of 4.7% (read: Consumer Spending Boosts U.S. Q3 GDP: ETFs to Buy).

Against this backdrop, below we highlight a few ETF areas that fetched sizable assets and that saw huge outflows in the month of October.

S&P 500 ETFs Win

iShares Core S&P 500 ETF (IVV - Free Report) and Vanguard 500 Index Fund (VOO - Free Report) amassed about $15.13 billion and $2.88 billion in October, respectively. Cheaper valuation probably lured investors to focus on the S&P 500 ETFs. Vanguard Total Stock Market ETF (VTI - Free Report) also fetched about $2.04 billion in assets in the month (read: S&P 500 in Correction Zone: Time to Buy ETFs?).

Treasury ETFs Top Too

SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report) , iShares 20+ Year Treasury Bond ETF (TLT - Free Report) , Vanguard Intermediate-Term Treasury Index Fund (VGIT - Free Report) and iShares 0-3 Month Treasury Bond ETF SGOV have gathered assets worth $4.83 billion, $3.87 billion, $3.21 billion and $1.88 billion respectively, in the month. Investors should note that short-term treasury bond ETFs offer decent yields, which caused them to be investors’ darlings.

Energy Caught Attention

Energy Select Sector SPDR Fund (XLE - Free Report) hauled in about $1.89 billion in assets. The Israel-Gaza war and its perceived ripple effects in the Middle East occasionally sent oil prices soaring in October. This has probably boosted investors’ interest in energy ETFs like XLE.

Corporate Bonds Bleed

iShares iBoxx $ High Yield Corporate Bond ETF (HYG - Free Report) , Vanguard Intermediate-Term Corporate Bond Index Fund (VCIT - Free Report) ,Vanguard Short-Term Corporate Bond Index Fund (VCSH - Free Report) witnessed assets worth $3.0 billion, $2.55 billion and $1.84 billion, respectively, gushing out of the funds. Since safer treasuries are yielding handsomely, investors probably dumped riskier corporate bond ETFs.

Emerging Markets Out of Investors’ Favor

Emerging markets ETFs iShares MSCI Emerging Markets ETF (EEM - Free Report) , iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB - Free Report) shed assets worth $2.37 billion and $1.67 billion, respectively, in October.  A surge in U.S. treasury bond yields caused investors less-interested in emerging markets products. The chances of high-for-longer interest rates in the United States (due to resilience in the economy and sticky inflation) kept the U.S. dollar steady in the month, which was another negative for the emerging markets bloc.

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