Stock markets across the globe have witnessed wild swings in the first half of 2020 thanks to the coronavirus outbreak. After plunging 35% from Feb 20 to Mar 23, they are now within 10% of February’s record highs. The slew of fiscal and monetary stimulus, progress in the development of a coronavirus vaccine or treatment and pick-up in economic activities after reopening led to a market rally.
However, the second wave of coronavirus infections once again made investors jittery to end the first half. The bonds market too has impressed with strong performances owing to a decline in yields. This is because the pandemic, resulting in recession fears as well as geopolitical tension, continued to make investors cautious, raising the appeal for safe-haven avenues.
As such, ETFs overall gathered about $202.2 billion in first-half 2020, per eftf.com, higher than $121.3 billion at the halfway mark of 2019. U.S. fixed income ETFs led the way, accumulating $92.3 billion followed by inflows of $68.1 billion for U.S. equity ETFs and $33.1 billion for commodity ETFs.
Corporate Bonds Rocks
Corporate bond ETFs garnered investors' love for Federal Reserve’s unprecedented corporate debt purchasing program. The central bank began purchasing corporate bonds and even corporate debt-related ETFs on May 12 in an effort to support credit markets and bolster liquidity amid the coronavirus pandemic. iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD - Free Report) pulled in $15.6 billion in capital in the first half, propelling its AUM to $54.7 billion. The fund has a Zacks ETF Rank #2 (Buy) (read: Corporate Bond ETFs Gain on Fed's New Initiatives).
Vanguard Intermediate-Term Corporate Bond ETF (VCIT - Free Report) and iShares iBoxx USD High Yield Corporate Bond ETF (HYG - Free Report) gathered $9.1 billion and $8.6 billion, respectively. VCIT has a Zacks ETF Rank #2 while HYG has a Zacks ETF Rank #3 (Hold).
The appeal for gold, as a great store of value and hedge against market turmoil, was on a rise due to COVID-19 pandemic. The number of fiscal and monetary policies taken by the government and central banks across the globe to combat the sharp economic slowdown due to the COVID-19 pandemic added to the metal’s strength. Further, rise in geopolitical tension lately fled investors’ flight to safety.
As a result, the ultra-popular product tracking this bullion SPDR Gold Trust ETF (GLD - Free Report) topped in terms of capital inflows. It has accumulated $15.5 billion in its asset base, propelling its total AUM to $67.3 billion. GLD has a Zacks ETF Rank #3 (Hold) (read: Gold Beats Stocks & Bonds in 1H: ETFs to Play).
Mixed Bag for U.S. Equity
After the worst-ever first quarter, Wall Street wrapped up its best quarterly performance in decades on combination of factors. Although the recent rise in new coronavirus cases sparked off fears of another possible lockdown, the rounds of data indicate that economy activity has started to pick up and damage from the pandemic has been less severe than anticipated.
As a result, Vanguard S&P 500 ETF (VOO - Free Report) was the most-loved ETF of the first half of 2020, pulling in nearly $22.5 billion in capital. This fund tracks the S&P 500 index. Vanguard Total Stock Market ETF (VTI - Free Report) and Invesco QQQ (QQQ - Free Report) saw inflows of at least $10.5 billion each. VTI offers exposure to the broad U.S. stock market while QQQ provides exposure to largest domestic and international non-financial companies listed on the Nasdaq. VOO has a Zacks ETF Rank #2, VTI has a Zacks ETF Rank #3 and QQQ has a Zacks ETF Rank #1 (Strong Buy).
On the other hand, SPDR S&P 500 ETF Trust (SPY - Free Report) led the redemptions list with $22.1 billion in outflows. This fund also has a Zacks ETF Rank #2 (read: S&P 500 Posts Best Q2 in Decades: 10 Best Stocks in ETF).
Emerging Market ETFs Lose
Emerging markets saw a tumultuous first half loaded with the coronavirus pandemic, resurgence in U.S.-China tensions and a collapse in oil prices. iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) shed maximum assets worth $4.9 billion in the first half. The two ultra-popular ETFs — iShares MSCI Emerging Markets ETF (EEM - Free Report) and Vanguard FTSE Emerging Markets ETF (VWO - Free Report) — saw outflows of $4.6 billion and $3.6 billion, respectively. IEMG and VWO have a Zacks ETF Rank #3 while EEM has a Zacks ETF Rank #4 (read: 5 International Equity ETFs That Trumped S&P 500 in 1H of 2020).
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