Investors reacted to the recent market downturn by pulling cash from ETFs tracking stocks and high-yield bonds, according to the latest flow data.
Equity ETFs saw outflows of $1.7 billion for the week ended Nov. 14 amid worries over the U.S. fiscal cliff, tax increases and spending cuts, Reuters reports.
The withdrawals from stock ETFs follow inflows of $4 billion the previous week, which was the most in seven weeks.
Bond ETFs had outflows of $789 million, reversing inflows of $1.7 billion the previous week and the most taken out of the funds since early September, Reuters said.
Within fixed-income, funds and ETFs that invest in high-yield bonds saw outflows of $1.3 billion in the latest week, Barron’s reports.
“While the high yield market’s overall long term valuation is relatively attractive given solid corporate balance sheets and well contained default rate expectations, heightened tail risks associated with the fiscal cliff and European crisis require us to maintain our current underweight rating on the asset class,” GMP Securities analysts said in the report.
Of last week’s outflows, $723 million came out of high-yield ETFs, according to the article. [High-Yield Bond ETFs Getting Junkier?]
iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG)
Full disclosure: Tom Lydon’s clients own HYG.