Having control of their currency helped lift Sweden and Switzerland above their EU counterparts and while this past week was true to that pattern, the strongest action was right here in the good old U.S. of A.
For all those candlestick fans out there, after forming a hammer pattern when it hit its 50 week moving average, the S&P 500 confirmed the bullish trend and bounced higher last week to the tune of 4.12% and recovering more than half of the losses since the mid-September highs. Bond investors have been given a warning with the while Vanguard Total Bond Market Index Fund (BND) showing it’s opposite pattern of a shooting star and possible indicating trouble ahead. With the AAII Investors Intelligence survey already bouncing back to the old highs we have to ask whether the trend is for real and whether it’s too late to join in on the fun.
As the old saying goes, “investors like to vote with their feet” so let’s review the ETFG Global Fund summary to check out month-to-date fund flows. The names of the biggest outflows for the month shouldn’t come as much surprise with broad market equity ETF’s showing heavy distribution as investors continue to remain cautious. While the SPDR S&P 500ETF (SPY) pulled in nearly $1.9 billion for the most recent week, it remains in a $16.3 billion dollar hole for the trailing month while broad equity exposure fund flows for mid-cap names remains weak with a further $66 million leaving the iShares Core S&P Mid-Cap ETF (IJH) to take the trailing monthly drawdown to over $3 billion.
Where are equity inflows unabashedly positive and with the performance to prove it? Traditional equity safe havens continue to dominate with REIT’s holding down the number one spot where the iShares Real Estate ETF (IYR) has pulled in over $1.5 billion and nearly increased assets by 50% in the last month and over surprisingly $700 million of that in the most recent week. The Consumer Staples Select Sector SPDR Fund (XLP) tells a similar story with over $588 million in asset growth for the most recent week and $1.17 billion for the trailing month. While it’s always tempting to go with the winning horse; the sector rotation for defensive to offensive names was so pronounced when the S&P 500 began moving higher in May there may be no safety in numbers.
While equity flows may have turned positive (or less negative as the case may be) have bond flows turned negative? According to Lipper Insight, bond flows (mutual funds and ETF’s) recorded their fifth week of inflows and while the Vanguard Total Bond Market Index Fund (BND) may have been down .3% last week, positive inflows continued to the tune of $262 million to take the trailing monthly inflow to over $3 billion and there’s a similar story for iShares Core U.S. Aggregate Bond ETF (AGG). For now investors seem to prefer the tried and true to going too far out on a limb, no matter what they tell an anonymous survey.
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