U.S. equity ETFs saw net redemptions in August but a buying spree this week fueled by the Federal Reserve’s more dovish stance is turning the tide in September, historically a weak month for stocks.
Many stock ETFs are on track for big inflows this month. For example, investors have pumped more than $12 billion into SPDR S&P 500 (NYSEArca: SPY) so far in September, according to IndexUniverse ETF flow data. SPY rallied to a new all-time high Wednesday after the Fed announced it would not taper its bond purchases. [Dow Theory Buy Signal]
Meanwhile, iShares MSCI Emerging Markets (NYSEArca: EEM) has gathered $2.9 billion and iShares Russell 2000 (NYSEArca: IWM) has attracted $1.8 billion. [iShares: Despite Appearances, Risk Appetite on the Rise in ETFs]
Just this week, Vanguard Mid-Cap ETF (NYSEArca: VO) has pulled in an “astounding” $960 million, says Chris Hempstead, director of ETF execution services at WallachBeth Capital. Also, Vanguard Extended Market ETF (NYSEArca: VXF) has increased assets under management this week by more than $425 million.
“There are a host of others but the August hysteria of ETF outflows is being replaced with inflows in September,” Hempstead said in a note Thursday. [Investors are Flocking to Europe and Mid-Cap ETFs]
Mutual fund investors are getting bullish on stocks. “Global equity funds attracted the largest inflows since at least 2005 in the week ended Sept. 18 as investors piled into stocks before the Federal Reserve’s decision to maintain monetary stimulus,” Bloomberg reported Friday.
Bloomberg ETF analyst Eric Balchunas said September ETF flows jumped $15 billion the last two days to hit $40 billion for the month. The single-month inflow record is $51 billion, he said.
In particular, SPY flows are rebounding after the ETF shed more than $13 billion in August.
Full disclosure: Tom Lydon’s clients own SPY, EEM and IWM.
Story updated to correct day of S&P 500’s record high.