Investors pour $30 billion into global ETFs

Key Points
  • ETFs had their strongest week of the year for flows, with more than $30 billion coming into funds.
  • Even as tech stocks declined, the U.S. stock market was the biggest beneficiary of ETF flows.
  • Global equity funds, excluding the U.S., have taken in money for every week this year for a year-to-date total of $48.54 billion.
  • Emerging market bond ETFs continue to attract money from investors, up to $35 billion for the year.
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Exchange-traded funds took in more than $30 billion in their strongest week this year, led by U.S. equity funds, as major market benchmarks hit new highs, according to EPFR Global.

Investors poured $31.6 billion into ETFs globally in the week ending on Wednesday, beating a previous high for the year of $26.5 billion during the week to April 26.

In spite of a high-profile sell-off in technology shares, particularly among the so-called Faangs — Facebook, Amazon, Apple, Netflix and Google — all four of the major U.S. indices hit new highs over the past week. The S&P 500, Nasdaq Composite and Russell 2000 reached intraday highs on Friday, while the Dow Jones Industrial Average hit a fresh high on Wednesday.

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"Everyone talks about Faangs, but it is a little bit of Fomo [fear of missing out]," said Matthew Bartolini, head of SPDR Americas research at State Street Global Advisors. "The equity market continues to rally."

Traders on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters

The SPDR S&P 500 ETF (SPY) took in the largest amount this week, EPFR said, followed by the iShares Core S&P 500 ETF (IVV) and iShares Russell 2000 ETF (IWM).

"It looks like classic peak-performance chasing," added Nicholas Colas, an independent analyst in New York.

While non-U.S. funds have taken strong flows this year, Mr. Bartolini pointed to a shift back towards the U.S. in the latest week.

EPFR data show global equity funds excluding the U.S. taking in money for every week this year for a year-to-date total of $48.54 billion. That compares with global equity funds, which include US exposure, having cumulative inflows of $17.13 billion so far this year.

Elsewhere, emerging market bond funds had their 20th consecutive week of inflows at $1.33 billion, bringing the total for the period to more than $35 billion.

The sector has benefited from persistently low yields on U.S. debt and a weaker dollar recently, the latter boosting areas with high levels of dollar-denominated debt.

UK equity funds suffered the eighth straight week of outflows with net redemptions totalling $563 million, amid continued political uncertainty. Investors withdrew more than $3 billion from these funds in the eight-week period.