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ETF TRADING RESEARCH
August ETF Fund Flows
Steady In A Sea Of
Volatility
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Hi, My name is Corey and I‘m with ETF
Trading Research, today were reviewing
our recently published article…
August ETF Fund Flows Steady In A Sea
Of Volatility
August turned out to be one of the most
turbulent months we’ve seen in awhile
for the financial markets.
The stock market selloff that began in
China eventually spread around the
globe and triggered the first 10% selloff
in US stocks since 2011.
Despite the market turbulence August
ETF Fund Flows held steady. Total
assets invested in US listed ETFs ticked
up $2.7 billion during the month.
Don’t get me wrong, that’s a fraction of
the inflows we have seen in previous
months. And that’s a good indication
of…
The Emotion Driving June ETF Fund
Flows
Fear is the dominant emotion on Wall
Street. Fear and greed can be measured
with a variety of different indicators. The
VIX, put and call option volume, and
market breadth are some of my favorite
to track.
Guess what all of these indicators of fear
and greed all have in common right now?
They all indicate investors are running
scared… the VIX is perfect example.
The VIX is the CBOE Volatility Index. It
measures the implied volatility of S&P
500 index options. It measures how
much volatility investors expect of the
next 30-days.
As you can see, the VIX spiked more than
twice as it had been at any other time this
year and continues to be much higher
than it had been.
In other words, investors are expecting
the S&P 500 to move three times as much
as they did before the recent selloff
started. This is a clear visual
representation of fear in the markets.
ETFs With The Largest Inflows In June
Despite the fear in the markets ETFs like
Vanguard S&P 500 $VOO and SPDR S&P
500 $SPY still logged net inflows of
around $1.5 billion in August.
This tells me two things…
Long term investors and swing traders
had been waiting in the wings for a
pullback to buy large cap US stocks. So,
there are investors that are bullish on US
stocks despite the overall fearful tone of
the market.
It also tells me that there is a growing
group of investors that are using ETFs to
invest systematically. These investors
aren’t following every market gyration.
They have a plan to deploy their new
capital into a group of ETFs every month
no matter what the markets are doing.
That’s a good sign of the growth in the
ETF market and the strength of the US
stock market.
ETFs With The Largest Outflows In June
The outflows also had some clear cut
indications… the first being investors
don’t want anything to do with emerging
markets. Not surprising given that China
is the epicenter of the recent selloff and
it’s still considered an emerging market.
The two ETFs hit hardest by redemptions
were the Vanguard FTSE Emerging
Markets $VWO and iShares MSCI
Emerging Markets $EEM. Investors
pulled more than $1.3 billion out of VWO
and EEM in August.
We also saw large redemptions of two US
sector ETFs Health Care Select Sector
SPDR $XLV and Technology Select
Sector SPDR $XLK both had net outflows
of more than $1 billion in August.
So, investor also took profits of the high
flying health care sector and trimmed
their exposure to the technology sector.
Here’s the bottom line…
We’ve seen some profit taking and
money moving from the areas most at
risk to further losses given the backdrop
of current events. But through it all
money continues to flow into ETFs.
Don’t forget that high levels of fear in the
market typically don’t last long.
Especially when there is good economic
data like we have in the US right now.
If these fears prove to be unfounded it
could be the thing that sparks a massive
bull market rally in US stocks into the
end of the year.
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