In a sharp contrast from the first quarter euphoria in the equities market, investors have dumped stocks over the second quarter in favor of fixed-income assets and exchange traded funds as economic tensions mount.
According to a State Street Global Advisors research note, all major equities indices were in the red over the second quarter, with the international developed MSCI EAFE Index leading the losers at a 13.2% drop, followed by the international small-cap S&P Developed Ex-U.S. Under USD$2 Billion Index with a 12.5% decline and the MSCI Emerging Markets Index falling 12.3%.
In contrast, the Barclays U.S. Government Inflation-Linked Bond Index added 4%, followed by U.S. Treasuries rising 3.2% and the Barclays Corporate Index increasing 2.0%.
Unsurprisingly within the ETF universe, the funds with the largest inflows were those tracking government and corporate debt. Government bond ETF added $3.9 billion and corporate bond ETFs attracted $3.4 billion. Meanwhile, international and emerging market stock ETFs lost $4 billion and high yield bonds dropped by $976 million.