The S&P 500-based ETF (SPY - Free Report) , Dow Jones-based ETF (DIA - Free Report) and Nasdaq 100-based (QQQ - Free Report) added about 3.3%, 4.9% and 1.8% in the past month (as of Oct 31, 2019). Announcement of the phase-one trade deal, Fed's rate cut, moderate earnings, marijuana crash and Brexit extension regulated the ETF world in October. Still, the value quotient prevailed in the market on worries of impending economic slowdown. Let’s delve a little deeper.
U.S. Equities Top
The S&P 500 reached a fresh high in October. In fact, there was a broad-based rally in the market on hopes of a trade deal and the Fed policy easing. No wonder, Vanguard Total Stock Market ETF (VTI - Free Report) accumulated about $2.46 billion in assets in the month (read: 10 Top-Ranked ETFs Beating S&P 500 This Year).
Minimum Volatility & Quality Rule
Low-volatility products have the potential to outpace the broader market during turbulent times, providing significant protection to the portfolio. These funds comprise more stable stocks that have seen the least price movement.
Despite positive developments from the Fed and trade, concerns prevailed in the market. Investors should note that despite easy money policies by the Fed this year, most of the economic data points came in weaker in September, be it manufacturing, retail or existing home sales. Consumer confidence came in at a fourth-month low in October. Business spending is also on the decline.
Although economic activity (+1.9%) in the United States has beaten expectations (+1.6%) in the third quarter, the momentum slowed down from the second quarter (+2%). It also lagged the Trump administration's forecast of 3% economic growth annually.
So, iShares Edge MSCI Min Vol U.S.A. ETF (USMV - Free Report) and iShares Edge MSCI U.S.A. Quality Factor ETF (QUAL - Free Report) attracted about $1.54 billion and $1.41 billion in assets in the month, respectively (read: Fed Cuts Rates, Signals Pause: Trick or Treat for ETFs?).
Bonds Are Hot
Fears of a global slowdown and policy easing kept the treasury bond yields low in the month. This boosted demand for high-yielding assets. iShares iBoxx USD High Yield Corporate Bond ETF (HYG - Free Report) , which yields about 5.23% annually, hauled in about $1.54 billion in assets (read: Guide to 10 Most-Heavily Traded ETFs).
Small-Caps Are Out of Favor
Small-cap ETFs were not in much demand as iShares Russell 2000 ETF (IWM - Free Report) lost about $1.20 billion in assets. U.S. slowdown fears have probably kept investors away from this segment.
Momentum ETFs Bled Assets
iShares Edge MSCI U.S.A. Momentum Factor ETF (MTUM - Free Report) has shed about $1.09 billion in the month. The event can very well be attributed to investors’ lack of faith in the Wall Street rally in October.
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