October sector ETF flows

Exchange traded funds inflows data for the month of October highlights that investors love stocks and their preference continues to lean toward higher-beta sectors.

“Investors have been pumping huge sums into equities in October.  Although global equity funds have only about one-third the assets of U.S. equity funds, global equity MFs and ETFs have received $24.5 billion this month, roughly equal to the inflow of $24.6 billion into U.S. equity MFs and ETFs,” according to TrimTabs Asset Management.

TrimTabs points out that combined equity fund inflows this month of $49.1 billion represent the fourth-best month on record and two of the three best inflows months have taken place this year: January and July.

At the sector level, flows indicate investors have preferred high-beta sectors, predominantly consumer discretionary and technology, over less exciting consumer staples and utilities names. [Fund Flows Show Investors Embracing Risk]

“Industrials, Consumer Discretionary, and Information Technology have all received at least 25% of assets this year.  The only sectors to post outflows this year have been Consumer Staples, which has redeemed 5% of assets, and Utilities, which has redeemed 6% of assets,” according to TrimTabs.

Although the Consumer Staples Select Sector SPDR (NYSEArca: XLP) turned in a decent performance this month, rising more than 6%, outflows from staples ETFs could be a sign that investors are concerned about elevated valuations in defensive sectors, another possible spike in interest rates or both scenarios. [Playing Defense Isn’t Cheap]