While investors have pulled billions of dollars from stock funds this year in response to the heightened volatility, U.S. equity exchange traded funds still remain a go-to investment choice to capture any further upside the markets may still yield.
According to Goldman Sachs, investors have about 12% of their portfolio in cash after seeking refuge from this year’s bouts of market volatility, the Wall Street Journal reports. The current cash levels rank in just the fifth percentile going back to 1990.
In comparison, investors held roughly 44% of their portfolios in stocks. While this percentage may be a drop from prior years, current investor allocations to stocks are still equivalent to the 81st percentile going back the past three decades.
The data indicates that despite ongoing worries about slowing global growth and lingering risks surrounding an unresolved trade war, demand for equities has remained robust, and Goldman argued there is reason to believe demand for stocks will remain strong into 2020.
Goldman pointed out that U.S. stocks are back at records after double-digit percentage returns after the pullback last year. Corporations, historically the biggest net buyers of stocks, could also resume plans for stock repurchases but at a slower pace than previous years.
ETF investors have also maintained heavy demand for stock ETFs through the year. Among the most popular ETF plays year-to-date, the iShares Edge MSCI Min Vol USA ETF (USMV) attracted $12.9 billion in net inflows, Vanguard Total Stock Market ETF brought in $12.2 billion in inflows, Vanguard S&P 500 ETF (NYSEARCA: VOO) added $10.9 billion and iShares Core S&P 500 ETF (NYSEArca: IVV) saw $9.7 billion i inflows, according to ETFdb data.
Nevertheless, bond ETFs were also attractive plays this year, especially with the Federal Reserve cutting interest rates and heightened volatility pushing more investors toward safety plays. Among the most popular ETF plays of so far this year, the Vanguard Total International Bond ETF (BNDX) saw $9.2 billion in new creations, iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT) attracted $8.1 billion and iShares U.S. Treasury Bond ETF (BATS: GOVT) brought in $7.7 billion.
For more information on the ETF industry, visit our ETF performance reports category.