Both equity mutual funds and exchange traded funds (ETFs) are on fire, if you’re measuring in terms of inflows. They’re on a hot streak that hasn’t been seen in more than five years. What gives?
David Hoffman for Investment News reports that U.S. equity mutual funds and ETFs posted a seventh straight week of inflows, their longest winning run since a nine-week stretch that ended in the forth quarter of 2004.
It’s not all sunshine and roses, though: year-to-date flows into the funds are still in negative territory, losing $6.9 billion to outflows, but that may not be for long. About $14 billion has come in over the last six weeks. [ETF Investors Get Some Love in February.]
Where has the hot money been going? None other than Japan. Since it was reported that the country’s exports were up 45% year over year last month, Japanese equity funds began to attract investor cash. They’ve posted inflows for 13 straight weeks, their longest since a 27-week streak since the second quarter of 2006. [10 Reasons to Love ETFs.]
That ETFs are getting inflows is an encouraging sign that investors are beginning to buy this rally. In the months following the market’s March 9 low, many traders remained skeptical and cautious. Inflows into ETFs underscore that investors are back and they’ve even got a little risk appetite, too.
For more stories about ETFs, visit our ETF 101 category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.