While the coronavirus pandemic has wrecked the decade-long bull rally and sent equities reeling, ETF investors are seeing the pullback as a buying opportunity.
“For some clients, the recent sell-off created an attractive opportunity to rebalance into equities,” Larry Fink, CEO of the world’s biggest asset manager BlackRock, told shareholders, according to CNBC. “Indeed, many of our clients – even those who generally have a heavy allocation to fixed income due to their risk profiles – are looking to increase their equity allocation in this market.”
ETF investors are already exhibiting increased demand for stocks. According to XTF data, U.S.-listed ETFs experienced $1.6 billion in net outflows over the past 1 month. However, equity ETFs revealed an aggregate $17.1 billion in net inflows.
Among the most popular stock ETF plays of the past month, the Vanguard S&P 500 ETF (NYSEARCA: VOO) attracted $8.0 billion in net inflows, SPDR S&P 500 ETF (NYSEArca: SPY) saw $7.1 billion in inflows, Invesco QQQ Trust (NASDAQ: QQQ) brought in $5.0 billion, Vanguard Total Stock Market ETF (VTI) experienced $3.3 billion in inflows and iShares MSCI ACWI ETF (NasdaqGS: ACWI) added $2.1 billion.
Investors may see the coronavirus-induced selling as a short-term uncertainty that does not mirror previous economic downturns.
“As dramatic as this has been, I do believe that the economy will recover steadily, in part because this situation lacks some of the obstacles to the recovery of a typical financial crisis,” Fink said. “Central banks are moving quickly to address problems in credit markets, and governments are now acting aggressively to enact fiscal stimulus.”
President Donald Trump recently signed in a historic $2 trillion stimulus bill to soften the economic fallout from the pandemic. The aid package expands unemployment benefits, provides $1,200 checks to individuals, offers loans to small businesses and includes a $500 billion Fed program to support corporate America. The bill also followed unprecedented action out of the Federal Reserve to stabilize financial markets.
“At BlackRock, we take a long-term view of markets, and we take a long-term view in the way we run our company,” Fink added. “The world will get through this crisis. The economy will recover. And for those investors who keep their eyes not on the shaky ground at our feet, but on the horizon ahead, there are tremendous opportunities to be had in today’s markets.″
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