Simultaneously with these flows, US ETF volumes spiked in June (see below), once again illustrating how investors are using ETFs to express market sentiment – even when that sentiment changes dramatically.
This is a trend we’ve seen before. When headline-making news triggers a sudden shift in investor sentiment and market volatility jumps, it has been followed by elevated ETF trading volumes in absolute dollar terms and also in proportion to total US equity market trading volumes. In June, ETFs accounted for 31% of the dollar value of all trading volume in US equity markets, up from 20-25% in recent months.
It’s important to note that June saw orderly trading of ETFs and, as designed, ETFs delivered liquidity under stressed market conditions.2 Investors were able move quickly and efficiently in and out of investment exposures, and this is a trend we expect will continue as more investors turn to ETFs to execute precise market views.
Dodd Kittsley, CFA, is the Head of Global ETP Market Trends Research for BlackRock.
- Data source BlackRock ETP Research and Bloomberg. Data is as of June 30, 2013
- Source: Bloomberg as of June 2013. Market volatility was sourced from Bloomberg as measured by elevated levels in the VIX and MOVE indexes. The MOVE index is up 125% in May-June 2013 (110.98 on June 24th 2013 vs. 49.24 at end of April).