Led by consumer discretionary, financial services and, perhaps surprisingly, energy funds, sector exchange traded funds continued hauling in assets last month.
“Sector flows were positive over the last month with investors favoring an interesting mix that highlights the theme of divergence that began to play out in 2014,” said Street Global Advisors Vice President and Head of Research Dave Mazza in a note out Monday.
Although it was the worst-performing sector in the S&P 500 last year, the energy group captured plenty of investor cash. Investors added $2.1 billion to the Energy Select Sector SPDR (NYSEArca: XLE) last month, helping to place the largest equity-based energy ETF as the only sector fund among the top 10 asset-gathering ETFs in 2014. [Investors Flock to Energy ETFs]
As of Dec. 26, there was $311.1 billion allocated to sector ETFs with energy ETFs accounting for $44.7 billion of that total, according to Bloomberg.
“This group experienced sizable inflows to start the year due to higher oil prices and production, then witnessed outflows persist as oil prices plunged. Finally, the sector has recently taken in money as investors look to bottom fish the market for relative valuation opportunities,” added Mazza.
Overall, investors poured $3.8 billion into consumer discretionary ETFs last month, with over $2.3 billion of that total going to the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) as consumers displayed a more ebullient attitude regarding the state of the U.S. economy.
Led by the Financial Select Sector SPDR’s (NYSEArca: XLF), financial service ETFs were also popular destinations in December with $3.7 billion of December inflows, according to State Street data. XLF, the largest financial services ETF, rose nearly 14% last year and the sector is not considered richly valued relative to the S&P 500. [Sector ETF Ideas for the First Half of 2015]