While U.S. stocks were enjoying their biggest weekly gain in close to half a century, exchange traded fund investors plowed into equities.
According to Bloomberg data, equity ETFs attracted over $16.5 billion in net inflows in just seven trading days this month, Bloomberg reports.
The most popular ETF plays over the past week are among the most widely watched sector-specific ETFs. For instance, Financial Select Sector SPDR (NYSEArca: XLF) attracted $2.1 billion in net inflows, Health Care Select Sector SPDR ETF (NYSEArca: XLV) saw $1.7 billion in inflows, Real Estate Select Sector SPDR Fund (NYSEArca: XLRE) added $1.6 billion and Materials Select Sector SPDR Fund (NYSEArca: XLB) experienced $1.5 billion in inflows, according to XTF data.
The swift inflows into stock ETFs put the industry on track to exceed the monthly total of $42.5 billion in December during the end of year rally.
The surge in stocks last week also helped U.S. shares gain a combined $3.2 trillion, which came as a welcomed relief after the S&P 500 Index plunged 30% in March. The more optimists are now focusing on the massive $2.3 trillion aid package and monetary stimulus measures that could help cushion the blow from the coronavirus pandemic, despite warnings from analysts that we will likely experience one of the biggest economic contractions in U.S. history and the worst earnings season ever.
Some believe that the swift turnaround may be associated with hopes that the aggressive stimulus measures will help quickly lift the economy back up.
“We saw a lot of emotional selling at the beginning of the outbreak, and it was mostly in very liquid vehicles,” Chad Oviatt, director of investment management at Huntington Private Bank, told Bloomberg. “When you go back to risk-on, you will start to see more flows into equity vehicles whether that’s ETFs or mutual funds.”
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