Retail traders bought heavily into the S&P 500 and technology ETFs in September despite a shaky month for both the broader market and the sector, while ultra-short strategies and Treasurys took minor sell-offs.
Those are the conclusions from estimates from VandaTrack, a product of Vanda Research that aims to track buying and selling of securities from individual-led accounts. Vanda only applies estimates to the top 100 ETFs by assets under management.
The top 10 ETFs by retail flow in September are listed below:
|Ticker||Fund||Retail Inflows ($M)*||Total Inflows ($M)**|
|SPY||SPDR S&P500 ETF Trust||2407.0||7477.5|
|QQQ||Invesco QQQ Trust||1503.4||854.42|
|IWM||iShares Russell 2000 ETF||195.3||304.5|
|LQD||iShares iBoxx USD Investment Grade Corporate Bond ETF||146.0||-1341.52|
|VOO||Vanguard S&P 500 ETF||123.9||3883.61|
|XLK||Technology Select Sector SPDR Fund||118.5||-721.37|
|TIP||iShares TIPS Bond ETF||109.0||977.96|
|VTI||Vanguard Total Stock Market ETF||96.3||3843.99|
|IVV||iShares Core S&P 500 ETF||95.3||-3088.05|
|XLV||Health Care Select Sector SPDR Fund||84.7||-1020.08|
*Estimates from VandaTrack/Vanda Research
**Data provided by FactSet
Buying The Dip
September wasn’t a particularly kind month to the SPDR S&P 500 ETF Trust (SPY), which lost 3.2% in the period, as fears over the COVID-19 pandemic’s resurgence, a default from Chinese real estate developer Evergrande and the fight over a U.S. default created turbulence for the large cap index.
Nor was it a good month on net for the tech-heavy Invesco QQQ Trust (QQQ), which sank 4.35% on the month after Treasury yields spiked with bets that a rate hike from the Federal Reserve is on the way.
But retail traders moved a net $2.4 billion into SPY and $1.5 billion into QQQ, far and away more than any other ETFs tracked by Vanda. This seems to be dip-buying activity to get into what has been two well-performing funds despite the macroeconomic head winds in view. SPY has produced returns of 17.35% year-to-date, while QQQ is up 14.92% so far in 2021.
QQQ in particular is a strong example of buying the dip, as the estimated $1.5 billion brought in from retail traders was offset heavily by institutional traders, to give the ETF a net inflow of $854 million for the entirety of September.
Short Bonds Lose Steam
The hardest-hit sector in retail ETF trading on the month was short bond strategies. The JPMorgan Ultra-Short Income ETF (JPST) had the largest loss, with $28.8 million in estimated outflows, while the Pimco Enhanced Short Maturity Active ETF (MINT) lost $13.1 million. Two iShares-branded short bond funds also saw drops in assets, with the iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares Short Treasury Bond (SHV) posting outflows of $10.1 million and $7.5 million, respectively.
Some of those assets may have been rotated into inflation-protected bond funds ahead of a holiday season that may add more stress onto a global supply chain that has already slowed to a crawl due to COVID-19, which in turn is restricting supply of several categories of goods and raising prices.
The iShares TIPS Bond ETF (TIP) gained $109 million from retail investors on the month, while the Vanguard Short Term Inflation-Protected Securities ETF (VTIP) gained $46.5 million.
Moves Opposite Net Flows
Vanda also estimated that several ETFs gained a small amount of net inflows from retail traders despite large outflows overall.
The largest spread between retail inflows and net outflows was the iShares Core S&P 500 ETF (IVV), which gained $95.3 million in net retail inflows despite shedding just under $3.1 billion in net assets.
Following that is the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD), which gained $146 million from retail traders against outflows of $1.34 billion. Two State Street funds also saw a spread between positive retail sentiment and bearish institutions, with the Health Care Select Sector SPDR Fund (XLV) gaining $84.7 million in retail assets against a $1 billion net outflow, while the Technology Select Sector SPDR Fund (XLK) lost a net $721 million despite $118.5 million in net retail inflows.