The month of April was all about coronavirus-led global lockdowns, massive Fed and government stimulus in the United States, unprecedented policy easing in various parts of the globe, the biggest OPEC+ output cut deal, enormous crash in the WTI crude due to storage crisis and Wall Street’s fast recovery after slipping into a bear market in mid-March (read:
Top ETF Stories of First Quarter).
Relentless research on treatments and vaccines and talks of the U.S. economy reopening following the improvement in virus cases have boosted the broader market. Moderate corporate earnings have also led to the market strength.
The S&P 500, the Dow Jones and the Nasdaq Composite added about 18.9%, 17.6% and 21%, respectively, past month (as of Apr 29, 2020). In this scenario, we highlight ETF asset flows for the month of April (
per etf.com). Gold Tops the List
Gold bullion ETF
SPDR Gold Trust ( GLD Quick Quote GLD - Free Report) has seen inflows of $4.83 billion in the month. While a safe-haven rally amid the coronavirus fear increased the lure for gold, moderate strength in the greenback thanks to Fed policy easing helped the yellow metal rally even more. The bullion gained more than 6% in April. Investment-Grade Corporate Bond ETF in High Favor
After its crisis-era policy launch, the Fed announced a fresh set of stimuli on Mar 23. The Fed added that the purchases of Treasury and mortgage securities are unlimited. Among other steps, the Fed confirmed
it would buy investment-grade corporate bond ETFs for the first time. However, the Fed cannot own more than 20% of any one ETF or 10% of individual corporate bonds.
The very announcement led
iShares iBoxx USD Investment Grade Corporate Bond ETF ( LQD Quick Quote LQD - Free Report) to haul in about $4.26 billion in assets, after raking in about $5.18 billion in Q1 (read: All-Out Fed Support: Buy Highly-Rated Corporate Bond ETFs). Virus Helps Healthcare
Healthcare stocks and ETFs were in investors’ favor amid the ongoing medical emergency. Large pharma and biotech companies are working on medicines, vaccines and testing kits. Most recently, Gilead (
GILD Quick Quote GILD - Free Report) indicated that the trial for coronavirus treatment Remdesivir has met its initial goal. Health Care Select Sector SPDR Fund ( XLV Quick Quote XLV - Free Report) fetched about $3.8 billion in assets in the month. WTI Crude ETF Gain From Its Shift to Futures
Due to low demand, ample supplies and drying storage capacity, May WTI crude contract fell to the negative territory on Apr 20, for the first time in history, and the June contract too suffered lately. But the demand scenario is more bullish for later months thanks to the gradual reopening of economies. This took the oil market in contango, which means futures contracts are trading at a premium to the spot price.
WTI crude ETF
United States Oil Fund, LP ( USO Quick Quote USO - Free Report) , which was originally designed to track the spot price of WTI crude oil, changed its structure repeatedly to counter the fast slide in oil prices. The fund started betting in favor of longer-term contracts since last week.
On Apr 27, USCF, the fund’s administrator, said that over the next three days, the USO will sell all of its West Texas Intermediate contracts for June delivery, in favor of longer-term contracts. Such restructuring helped USO gain about $3.76 billion in assets in the month(read:
Oil in Great Contango: Here's How to Play With Crude ETFs). High-Yield Adds Assets Too
In mid-April, the Fed said it would expand its bond-buying program to include debt that was investment-grade rated as of Mar 22 but was later downgraded to no lower than BB-, or three levels into high yield. The very move made
iShares iBoxx USD High Yield Corporate Bond ETF ( HYG Quick Quote HYG - Free Report) more appealing and it added about $2.78 billion in assets in the month (read: Fed Goes the Extra Mile: 6 ETF Areas to Win). ESG ETFs Appear Virus Proof
ESG ETFs appeared somewhat resilient to the acute coronavirus selloff in Q1. At the end of March, which was the worst month for Wall Street since October 2008, total assets of ESG ETFs were $19.1 billion, down from the peak of $20.8 billion in February but still higher than any point in 2019, noted Bloomberg. The winning trend continued in April too with
iShares ESG MSCI U.S.A. ETF (attracting about $2.53 billion (read: ESGU Quick Quote ESGU - Free Report) ESG ETFs Appear Unscathed by the Coronavirus Carnage). S&P 500 Loses, But QQQ Gains
SPDR S&P 500 ETF Trust (and SPY Quick Quote SPY - Free Report) Vanguard S&P 500 ETF (lost about $2.38 billion and $1.43 billion in assets, respectively. Meanwhile, VOO Quick Quote VOO - Free Report) Invesco QQQ Trust (raked in about $3.40 billion in assets, which showed investors’ interest in the tech-heavy Nasdaq. QQQ Quick Quote QQQ - Free Report) Emerging Markets Fell Out of Investors’ Favor iShares Core MSCI Emerging Markets ETF (shed about $2.44 billion in assets in April as the space is struggling with coronavirus-led full or partial lockdowns and economic crisis. IEMG Quick Quote IEMG - Free Report) Want key ETF info delivered straight to your inbox?
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