Investors dumped $86 billion into stock ETFs in 2020, only adding to the case for the iShares Core S&P 500 ETF (IVV).

“Despite the recent turmoil in the bond market, the S&P 500 Index extended a rally from its March 2020 lows to more than 70% and ETFs tracking stocks notched their best month of inflows on record, according to data compiled by Bloomberg,” an article in Bloomberg explained. “Traders added almost $86 billion to those funds in February. Equities climbed Monday, led by companies tied to economic reopenings and faster growth.”

IVV seeks to track the investment results of the S&P 500, which measures the performance of the large-capitalization sector of the U.S. equity market. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index.

It may invest the remainder of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund track the underlying index. The ETF gives investors:

  • Exposure to large established U.S. companies
  • Low cost, tax efficient access to 500 of the largest cap U.S. stocks
  • Use at the core of one’s portfolio to seek long-term growth

IVV Chart

Equities Still Brimming with Optimism

The markets faced a slight setback last week as inflation fears stoked sell-offs by week’s end. Nonetheless, it was a February full of optimism for the markets moving forward.

“Investor psychology has shown a bias toward optimism,” said Keith Buchanan, portfolio manager for GLOBALT Investments in Atlanta. “The animal spirits, if you will, are and have been at play in the past 11 months in this rally. There’s a lot of liquidity still out there, and it has found a home.”

Even in November when a good majority of the markets rallied during a presidential election and positive vibes around a forthcoming vaccine, February was still comparatively strong. As the Bloomberg article notes, “BlackRock Inc.’s iShares Core S&P 500 ETF (IVV) also experienced a record month after an intake of $8.4 billion, while Invesco QQQ Trust Series 1 (QQQ) came in third place, with $3.5 billion.”

“Despite the volatility, where else can investors park money?” posited Mohit Bajaj, director of ETFs for WallachBeth Capital. “Bond yields have rallied so much, investors would shy away from fixed income because of the price depreciation. Equities ETFs would be the only possible substitute.”

For more news and information, visit the Equity ETF Channel.