The so-called Great Rotation is on, at least in ETFs, as investors shift to U.S. stocks and away from bonds, which have enjoyed a three-decade rally.
“Investors have been pouring money into ETFs this month, shrugging off concern that the Federal Reserve is poised to slow stimulus. About $27.9 billion was sent to American share ETFs this month, about four times the amount deposited last month and the most in almost five years,” Bloomberg reports.
So far in July, investors have pumped more than $11 billion into SPDR S&P 500 ETF (NYSEArca: SPY) alone, according to IndexUniverse flow data. [Investors Chase Rally with S&P 500, Nasdaq-100 ETFs]
They have added $2.6 billion to the small-cap iShares Russell 2000 (NYSEArca: IWM) this month, while PowerShares QQQ (NasdaqGM: QQQ) has gathered $1.8 billion and Financial Select Sector SPDR (NYSEArca: XLF) has reeled in $1.2 billion. [XLF Sets Sights on Japan ETFs for Flows Crown]
“If you are looking for the source waters of the recent melt-up in U.S. stock markets, look no further than U.S. listed exchange traded funds,” says Nicholas Colas, chief market strategist at ConvergEx Group. [Investors Pumping $2 Billion a Day Into U.S. Stock ETFs in July]
However, Michael O’Rourke, chief market strategist at JonesTrading Institutional Services, isn’t convinced that ETF money is driving the market, WSJ.com’s MoneyBeat blog reports.