U.S. markets were destabilized in August after pushing toward record highs as a bout of political risks abroad and at home caused many traders to sell and lock in recent gains. Meanwhile, exchange traded fund seemed to have viewed the recently selling as a short-term event, funneling billions back into to big, stable equity plays.
The SPDR S&P 500 ETF (NYSEARCA: SPY) remained the most popular play over August, attracting $3.7 billion in net inflows, according to XTF data. The popular S&P 500 ETF play has been a go-to for institutional-level investors seeking to quickly go in and out of the market as SPY has consistently shown low bid-ask spreads, even in face of high volume trades.
Along the same lines, the iShares Russell 2000 ETF (NYSEArca: IWM) saw $2.6 billion in net inflows, Vanguard FTSE Developed Markets ETF (NYSEArca: VEA) brought in $1.8 billion, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) added $1.1 billion, PowerShares QQQ (NasdaqGM: QQQ) attracted $1.0 billion and Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) experienced $853 million in inflows over August. These ETFs are among the most popular plays in their respective asset categories.
The broad iShares Core U.S. Aggregate Bond ETF (NYSEArca: AGG) was the only popular fixed-income play that ranked among the top 10 over August, bringing in $1.1 billion in new money.
The Industrial Select Sector SPDR (NYSEArca: XLI), the largest industrial sector ETF, experienced $1.1 billion in net inflows. This sector play stood out as consumer staples, consumer discretionary, health care, energy and financial sector ETFs were among the most hated plays last month.
The SPDR Gold Shares (NYSEArca: GLD) also stood out with $1.0 billion in inflows, but it wasn’t too surprising as the sudden bout of volatility did push more investors toward safe-haven bets.
On the other hand, the ProShares Short VIX Short-Term Futures ETF (NYSEArca: SVXY), which both follow the inverse or -100% daily performance of VIX futures, brought in $907 million over the past month. SVXY may be seen as a very bullish play as it takes a bearish bet on the CBOE Volatility Index, or so-called VIX and the gauge of market fear. Some traders may be projecting greater market complacency ahead, turning to SVXY as a means to play an ongoing bull market in a year of muted volatility.
Related: ETF Performance Report: August 2017
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.