The Real Estate Select Sector SPDR Fund (NYSEArca: XLRE) stood out in September, gaining $3.2 billion in net inflows for the month, according to ETF.com. But the sudden influx in assets may be deceptive as a good chunk of the huge inflows were due to a special dividend that spunout real estate investment trusts from the broader financials sector.
As we have previously told investors prepping for a big change to a popular financial ETF, the Financial Select Sector SPDR (NYSEArca: XLF) was reconstituted to remove real estate companies from the financial sector, except for mortgage REITs in response to the S&P Dow Jones Indices’ changes to index constituents of the benchmark. XLF investors who held onto shares going into the the changes were issued a special dividend comprised of shares of XLRE.
Investors continued to pile into large-cap U.S. stocks over September. For instance, among the most popular ETFs of the month, the Vanguard 500 Index (NYSEArca: VOO) attracted $1.4 billion in net inflows, iShares Russell 1000 Value ETF (NYSEArca: IWD) saw $1.2 billion in inflows and iShares Core S&P 500 ETF (NYSEArca: IVV) added $665 million. Large-cap U.S. stocks typically experience greater attention during more uncertain market conditions. On the other hand, the SPDR S&P 500 ETF (NYSEArca: SPY) saw $3.9 billion in outflows, which suggests that institutional traders are trimming their exposure to U.S. stocks while smaller long-term investors have been shifting into the cheaper IVV and VOO options.