As volatility has increased in the financial markets this week, investors are crowding into money market funds and withdrawing money from stocks and bonds, both taxable and non-taxable.
The data for the chart above comes from Refinitiv Lipper, which also provides a little more context that shows how investors are preparing for the worst case.
In the equity fund category, an exchange-traded fund that contains utility stocks recorded some of the most significant entries of the week. The Select Utility SPDR sector
XLU,
picked up $ 1.3 billion.
In contrast, the SPDR ETF Financial Select Sector
XLF,
$ 1.4 billion in cash outflows, making it the second loser of the week. This is likely due to the fact that bond yields are so depressed: as investors flock to safe havens and react to the Federal Reserve rate cuts, it pushes prices up and yields fall off a cliff. Banks make money when there is a larger spread between shorter interest rates and longer rates, and when rates are overall so low, they don’t have much room for maneuver.
Investors have also turned to security in the fixed income category. IShares 7-10 Year Treasury Bond ETF
IEF,
attracted the most net new money among taxable fixed income ETFs, while the iShares iBoxx $ Investment Grade Corporate Bond ETF
LQD,
lost $ 2.0 billion. Right behind there was a high yield bond fund from the SPDR family
JNK,
, which lost $ 1.5 billion.
See:Concerns about coronaviruses are hanging over global markets. What do ETF investors do?
As volatility has increased in the financial markets this week, investors are crowding into money market funds and withdrawing money from stocks and bonds, both taxable and non-taxable.
The data for the chart above comes from Refinitiv Lipper, which also provides a little more context that shows how investors are preparing for the worst case.
In the equity fund category, an exchange-traded fund that contains utility stocks recorded some of the most significant entries of the week. The Select Utility SPDR sector
XLU,
picked up $ 1.3 billion.
In contrast, the SPDR ETF Financial Select Sector
XLF,
$ 1.4 billion in cash outflows, making it the second loser of the week. This is likely due to the fact that bond yields are so depressed: as investors flock to safe havens and react to the Federal Reserve rate cuts, it pushes prices up and yields fall off a cliff. Banks make money when there is a larger spread between shorter interest rates and longer rates, and when rates are overall so low, they don’t have much room for maneuver.
Investors have also turned to security in the fixed income category. IShares 7-10 Year Treasury Bond ETF
IEF,
attracted the most net new money among taxable fixed income ETFs, while the iShares iBoxx $ Investment Grade Corporate Bond ETF
LQD,
lost $ 2.0 billion. Right behind there was a high yield bond fund from the SPDR family
JNK,
, which lost $ 1.5 billion.
See:Concerns about coronaviruses are hanging over global markets. What do ETF investors do?