ETFs are back in July.
The U.S. ETF business saw redemptions of about $12 billion in June amid Federal Reserve tapering fears, the first monthly outflow since December 2011.
However, investors are flooding back into ETFs so far this month.
“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.
“Over the first 12 trading days of the new quarter, investors have added some $24.4 billion of new assets to ETFs which focus on U.S. equities, or over $2 billion per day,” he said in a note Friday. “That’s almost 4x the run rate of the first half of 2013 and simply a torrent of fresh money by even the ETF industry’s go-go standards.”
Overall, ETF creations have totaled $30 billion thus far in July.
SPDR S&P 500 (NYSEArca: SPY) has been driving the massive inflows to U.S. equity ETFs. The fund this week broke through $150 billion in assets for the first time. SPY has reeled in $12 billion so far this month, or about $1 billion a day. [S&P 500 ETF Nears $150 Billion as Assets Reach All-Time High]