Hello! This week’s ETF Wrap gives you a look at where investors put their money to work in January — and where they didn’t. Please send feedback and tips to [email protected] or [email protected]. You can also follow me on X at @cidzelis and find me on LinkedIn. Isabel Wang is at @Isabelxwang. Sign up here for our weekly ETF Wrap.
Investors in U.S.-listed exchange-traded funds are rotating out of cash-like government bonds this year, with a roughly even mix of flows into stocks and fixed income in January, according to State Street Global Advisors. Ultrashort government bond ETFs — whose holdings mature within a year — saw $3 billion worth of outflows in January, as investors withdrew their capital from such funds for a third straight month, according to Matthew Bartolini, head of SPDR research for the Americas at State Street Global Advisors. Investors are moving their money away from such ETFs on the expectation that interest-rate cuts by the Federal Reserve this year will lower the yield on Treasury bills held by the funds, he said by phone. Investors kicked off 2024 by adding a “subdued” $23 billion in equity ETFs, while allocating $21 billion to exchange-traded funds that buy bonds, he found. Within fixed income, Bartolini said that investors showed a preference for corporate debt, allocating to both investment-grade and high-yield bonds. U.S.-listed ETFs tend to start each year on relatively weak footing based on January flows, he said, while noting that “this January was better than most Januaries,” even as overall inflows lagged historical monthly averages. The U.S. stock market is off to a positive start in 2024 against the backdrop of an economy that has appeared solid, with a historically low unemployment rate as recently as December. Investors will get a reading on January employment numbers on Friday. Major U.S. equities indexes posted gains in January, with the S&P 500 rising for a third straight month, according to Dow Jones Market Data. Shares of the SPDR S&P 500 ETF Trust
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Investors in U.S.-listed exchange-traded funds are rotating out of cash-like government bonds this year, with a roughly even mix of flows into stocks and fixed income in January, according to State Street Global Advisors. Ultrashort government bond ETFs — whose holdings mature within a year — saw $3 billion worth of outflows in January, as investors withdrew their capital from such funds for a third straight month, according to Matthew Bartolini, head of SPDR research for the Americas at State Street Global Advisors. Investors are moving their money away from such ETFs on the expectation that interest-rate cuts by the Federal Reserve this year will lower the yield on Treasury bills held by the funds, he said by phone. Investors kicked off 2024 by adding a “subdued” $23 billion in equity ETFs, while allocating $21 billion to exchange-traded funds that buy bonds, he found. Within fixed income, Bartolini said that investors showed a preference for corporate debt, allocating to both investment-grade and high-yield bonds. U.S.-listed ETFs tend to start each year on relatively weak footing based on January flows, he said, while noting that “this January was better than most Januaries,” even as overall inflows lagged historical monthly averages. The U.S. stock market is off to a positive start in 2024 against the backdrop of an economy that has appeared solid, with a historically low unemployment rate as recently as December. Investors will get a reading on January employment numbers on Friday. Major U.S. equities indexes posted gains in January, with the S&P 500 rising for a third straight month, according to Dow Jones Market Data. Shares of the SPDR S&P 500 ETF Trust
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