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ETF Asset Report of Last Week: U.S. Stocks a Hit

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Risk-on trade sentiments were palpable last week. Investors poured money into global equity funds at the fastest rate in almost two years on cues of a U.S.-China initial level trade deal and central banks’ policy easing. Mutual funds and exchange traded funds that are focused on global equities amassed about $7.5 billion for the week ended Nov 6, according to EPFR Global.

Against this backdrop, we discuss the ETF asset report of last week (as of Nov 7, 2019).

U.S. Stocks Top

Last week went well for the S&P 500 and the Nasdaq as evident from the $1.59-billion of inflows into Invesco QQQ Trust (QQQ - Free Report) , $1.17 billion into SPDR S&P 500 ETF Trust (SPY - Free Report) , $971.0 million into Vanguard S&P 500 ETF (VOO - Free Report) and $727.9 million into iShares Russell 2000 ETF (IWM - Free Report) . A dovish Fed, receding trade war tensions as well as global growth worries and a decently growing U.S. economy have led to this uptick.

Technology A Hit

Small-cap ETFTechnology Select Sector SPDR Fund (XLK - Free Report) accumulated about $963.9 million in assets in the month. Demand for emerging technology has been hot. The cyclical nature of the sector is making it an apt bet at the current level.

Japan ETF in Favor 

iShares MSCI Japan ETF (EWJ - Free Report) fetched about 648.2 million in assets last week as the key Japanese stock index is mainly loaded with export-driven stocks and it performs better in a falling yen environment. Invesco CurrencyShares Japanese Yen Trust (FXY - Free Report) lost 0.3% last week, encouraging investors to pour into Japan stocks.

Financials Are Investors’ Darling

The yield curve also steepened lately. On Nov 8, the spread between the 10-year and two-year treasury yield stood at 38 percentage points versus 16 percentage points recorded at the start of the year, benefitting financial stocks and ETFs. Also, valuation is cheaper for this segment. Financial Select Sector SPDR Fund (XLF - Free Report) hauled in about $627.3 million in assets (read: 3 Reasons to Bet on Bank ETFs Now).

International Bonds Still in Favor

Vanguard Total International Bond ETF (BNDX) raked in about $531.2 million in assets as several international economies have been practicing easy money policies. Europe and Japan have QE and negative interest rate policies in place. As a result, low rates push investors toward international bond ETFs (read: ETF Asset Report of Q3).

Dividend ETFs Lose Luster

As bond yields rose, the demand for dividend ETFs fell.SPDR S&P Dividend ETF (SDY) thus shed about 1.39 billion in assets.

U.S. Long-Term Treasury Fared Better 

iShares 20+ Year Treasury Bond ETF (TLT - Free Report) lost about $755.1 million in assets as a rising rate environment acted against the fund. Schwab Short-Term U.S. Treasury ETF (SCHO - Free Report) saw $516 million in assets gush out, SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL - Free Report) bled about $484.7 million in assets (read: Fed Cuts Rates, Signals Pause: Trick or Treat for ETFs?).

Low-Volatility ETFs Shed Assets

As risk-on sentiments are back, low-volatility ETFs fell out of investors’ favor. Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) lost about $559.2 million in assets last week. 

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