LinkedIn Leads Stock ETFs Higher
May 19th 2011 at 6:56pm by Tom Lydon
Stock exchange traded funds ended Thursday higher after shares of social network LinkedIn (NYSE: LNKD) more than doubled in price after launching on the New York Stock Exchange, offsetting concerns about weak economic data.
An ETF that invests in initial public offerings won’t benefit from the more than 100% jump in LinkedIn shares on their first day of trading Thursday. That’s because IPO’s are eligible for the ETF’s tracking index only after trading for at least six days. Stocks are held for as long as 1,000 trading days. First Trust US IPO Index Fund (NYSEArca: FPX) only has about $21 million in assets. The ETF holds 100 stocks. IPO’s are screened and are only able to enter the tracking index on the close of the sixth trading day, according to the ETF’s prospectus. [IPO ETF Won't Catch LinkedIn First Day Surge]
Investors favoring bond ETFs rather than stock and commodity ETFs so far this month is a sign of waning risk appetite. The latest flows in exchange traded products “suggest that investors have begun to engage in a ‘risk-off’ trade during May,” said Deutsche Bank ETF analysts led by Shan Lan in a note Thursday. “Equity ETP flows have been moving sideways accumulating just $138 million inflows in the first two weeks of the current month, while commodity ETPs have lost $3 billion in outflows in the same period,” according to the report. [ETF Buying Patterns Suggest "Risk-Off" Trade]
Investors have been shifting money to consumer staples ETFs that invest in Wal-Mart (NYSE: WMT) and other defensive stocks to provide stability and income to their portfolios. Standard & Poor’s Equity Strategy recently boosted its opinion on the consumer staples sector to overweight from market weight. The sector’s defensive attributes and above-average 2.9% dividend yield position it for outperformance, according to the analysts. [Investors Play Defense with Consumer Staple ETFs]
ETFs and similar products that track gold prices saw net outflows of 56 metric tons, or about $2.5 billion, in the first quarter, the World Gold Council said in a report Thursday. “Redemptions were concentrated in January,” the organization said in the report. “Despite the outflows, the collective volume of gold held by global ETFs by the end of the quarter was in excess of 2,100 [metric tons] equating to more than $95 billion.”[Gold ETFs Saw $2.5 Billion Outflow in First Quarter]
Gregory A. Clay contributed to this article.
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