Investors moved in approximately $11 billion into equities-focused ETFs during the week ended February 13, 2014. There was a $9.24 billion total inflow into the U.S. equity ETFs, as markets surged. This was in response to the Federal Reserve Chairman Janet Yellen’s assertion to stay the course on reducing the central bank’s economic stimulus. Fixed-income ETFs experienced total inflows of $2.6 billion, which paled in comparison with the first week’s $11.26 billion in fixed income inflows, but the investors continued to be optimistic about the market.
The SPDR S&P 500 ETF (SPY) led all equity funds, raking in $5.3 billion last week, bringing its total assets up to $154.0 billion. The Pimco 0-5 Year High Yield Corporate Bond (HYS) led all bond inflows, pulling in $504.7 million. The iShares U.S. Industrials (IJY) was the least popular ETF in the week, redeeming $636.6 million, bringing its assets down to $1.28 billion. As 2014 began, the consensus expectation was for accelerating economic growth and continued weakness in bonds. But as economic indicators like started sending mixed signals, for example, higher economic growth coupled with higher unemployment figure and low housing market data, there was growing uncertainty over the overall economy and investors once again began to appreciate the various risks that continue to permeate the global economy. This resulted in corresponding rally in bonds. This is a typical investor reaction to prefer yield over price appreciation when unsure about where to invest and is called “flight-to-safety.”
© 2013 Market Realist, Inc.