E is for ETF and Election

Equity ETFs snap a 2 week streak of inflows and see -$5.2B in outflows week ending 11/4.  It was “Risk Off” in US Sectors, only Utilities posted inflows. Industrials, Tech, and Consumer Discretionary saw large outflows.   The same trend was seen in International ETFs, no country saw significant inflows.  Emerging Markets broke the streak the streak of 17 consecutive weeks of inflows as they lost -$362M in assets last week. 

 Fixed Income ETFs flows were more interesting than equity flows in my opinion.  High Yield ETFs saw a second week of large outflows totaling -$1.8B led by HYG & JNK (see table below for details). TIP (iShares TIPS ETF) posted the largest inflow of any ETF +$1.1B as someone is expressing a view of increased inflation on the horizon.  A further “Risk Off” barometer could be seen in short term Bonds funds which added +$745M led by SHY (iShares 1-3 Year Treasury Bond ETF) posting $552M inflows, see my video on why it’s important to watch these short term bond flows: https://youtu.be/aplW3Um92ps

US Sectors (5d): 

-     Largest Inflows:       - Utilities +$184M: XLU +$239M, FXU -$25M

-     Largest Outflows:       - Industrials -$568M: XLI -$514M, IYJ -$44M, IYT +$44M       - Tech -$473M: XLK -$302M, SMH -$107M, RYT -$92M, TECL -$67M       - Consumer Discretionary -$304M: XLY -$161M, XRT -$33M, FXD -$30M, XHB -$27M       - Health Care -$292M: XLV -$239M, IHI -$54M, FXH -$49M, VHT -$42M, IYH -$41M, XBI +170M, IBB +$40M       - REITs -$255M: VNQ -$252M, DRN -$50M, XLRE -$48M, RWX -$27M, IYR +$89M

International (5d):

- International ETFs -$754M - Country/ Region specific ETFs: Largest Inflows: - No Inflows > $100M

Largest Outflows: - Emerging Mkts -$362M: EEM -$323M, EMB -$114M, IEMG +$26M - Developed Mkts -$335M: VEA -$412M, EFA -$102M, HEFA -$40M, SCHF +$94M, IEFA +$84M, EFV +$36M - Mexico -$153M: EWW -$153M

ETFs of the Week:

TIP (iShares TIPS ETF)

As mentioned in the ETF Flow section, TIP saw the highest inflows of any ETF last week.  Take a look at the white line at the right of the chart, this illustrates a large appetite for inflation protected treasuries.  While there are no options on TIP, this may be a good cash investment.

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