Global exchange traded fund redemptions were above a three year high last week as investors funneled billions out of U.S. equities markets.
A total of $15 billion worth of redemptions were made in equities-based ETFs, with around $10 billion in the SPDR S&P 500 ETF (NYSEArca: SPY), reports Clare Dickinson for IFAonline. [Technical Traders Eye S&P 500 ETF ‘Flag’]
“The primary market is generally a domino effect, things start to happen later,” Laurent Kssis, head of ETF advisory and sales at Cowen, commented. “In between there are market makers and they are managing inventories so they might not redeem straight away… market makers tend not to hold inventories for too long in depreciating markets.”
Kssis points out that when redemptions start increasing in U.S. exchanges, others will quickly follow. Last week, the balance of outflows came from European ETFs, according to Cowen. [ETF Inflows Slow in August]
Fixed-income ETFs, on the other hand, experienced $2.8 billion in new inflows, an eight week high, propped by greater demand for corporate bonds.
For more information on the S&P 500, visit our S&P 500 category.
Max Chen contributed to this article.
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.