As global markets plunged deeper into a correction, investors exited stock exchange traded funds for the third straight week.
According to EPFR data, U.S. stock funds experienced $4.2 billion in withdrawals for the week ended January 20, which added to the worst three-week period of outflows since April, Reports Eric Platt for the Financial Times.
According to Markit data, global stock ETFs saw more than $7.77 billion in outflows year-to-date while bond ETFs attracted $8.46 billion in net inflows.
Among the least loved ETFs so far this year, the SPDR S&P 500 ETF (NYSEArca: SPY) saw $4.1 billion in outflows, iShares Russell 2000 ETF (NYSEArca: IWM) saw $2.1 billion in redemptions, PowerShares QQQ (NasdaqGM: QQQ) lost $2.0 billion, iShares MSCI Emerging Markets ETF (NYSEArca: EEM) shrunk by $1.3 billion and Technology Select Sector SPDR (NYSEArca: XLK) saw $1.1 billion in outflows, according to ETF.com.
On the other hand, investors piled into ETFs that track more conservative bonds and other safe-haven assets. For instance, year-to-date, the iShares Short Treasury Bond ETF (NYSEArca: SHV) attracted $2.0 billion in net inflows, iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) brought in $1.4 billion, iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF) added $1.1 billion, SPDR Gold Shares (NYSEArca: GLD) saw $704.7 million in inflows and Utilities Select Sector SPDR (NYSEArca: XLU) experienced $542.5 million in inflows.
Funds that track U.S. government paper saw the most inflows, with Treasury funds attracting $2.5 billion of inflows in the past week, their largest weekly influx in almost 10 months, according to Lipper data.
Pulling on market sentiment and investor confidence, fears of a slowdown in China and plunging commodity prices, notably oil, have fueled the risk-off mood.
“It is clear that the ever-declining oil price is public enemy number one,” David Rosenberg, chief economist and strategist with wealth management group Gluskin Sheff, told the Financial Times. “We need stabilization here before the equity markets turn up. China is a risk, obviously, but more in a sense of a general loss of confidence in government policy than anything really to do with a hard landing.”
Surprisingly, as oil prices plunged toward a 12-year low, ETF investors funneled an additional $592.7 million into the United States Oil Fund (NYSEArca: USO), which shows that many traders were either trying to time a market rebound or were increasingly using USO as a means to execute short oil trades.
Max Chen contributed to this article.