Investors continue to push into the equities markets and could throw a record amount of cash into stock exchange traded funds, capitalizing on the continued easy money environment.
ConvergEx Group Chief Market Strategist Nicholas Colas projects U.S.-listed ETF asset inflows will hit $220 billion this year, topping last year’s record $188 billion, reports Hung Tran for IndexUniverse.
“Market participants will buy risky assets as long as the Fed continues to buy bonds,” Colas said in the article. “There is definitely a risk-on type of mentality and that’s been very positive for ETF flows this year.”
The Fed’s unexpected decision to maintain its $85 billion monthly bond purchasing plan instigated quick rally, with the S&P 500 hitting a new record high. [Investors Piling Back Into ETFs on Record-High Stocks, Dovish Fed]
“The Fed made such a big point in March that the entire world was loaded up on tapering in September,” Colas asid.
At the end of August, ETFs attracted $94 billion in inflows, a little less than the $99 billion in inflows for the first eight months of 2012. IndexUniverse data reveals that September inflows already amount to over $20 billion.
Colas, though, warns that dividend ETFs may not relive its previous popularity.
“The wrinkle may be in dividend-oriented products because that’s an area that really hasn’t had a lot of favor this year,” Colas added. “And to the degree that banks are dividend plays, those might not see flows.”
For more information on ETF asset flows, visit our ETF performance reports article.
Max Chen contributed to this article.