Rising markets are fueling U.S. ETF inflows.
U.S.-listed ETF assets broke through the $1.5 trillion mark Monday, benefiting not only from solid inflows into everything from equities to bond funds, but also from rising stock markets that have recently been trading at record highs.
In the first four months of the year, investors poured almost $64 billion into U.S.-listed ETFs, or 7.5 percent more than the nearly $59.5 billion in the same year-earlier period, according to data compiled by IndexUniverse. The latest milestone came nearly two and a half years since the U.S. ETF market hit its first $1 trillion in assets, and roughly 20 years after the very first U.S. ETF, the SPDR S&P 500 (NYSEArca: SPY), was launched.
U.S. equities ETFs now snag just about $1 out of every $2 that’s going into the U.S. ETF market these days, and equities ETFs represent roughly two-thirds of all U.S.-listed ETF assets. It's only appropriate that yesterday's final push over the $1.5-trillion-mark was led by asset inflows into U.S. equities ETFs to the tune of $2.57 billion, with SPY leading net asset gains with inflows of $817 million on the day.
The solid inflows into equities come at a time when the S&P 500 Index is trading around the 1,600 level for the first time ever. The index has now climbed 13.2 percent year-to-date, helped by improving, if not stellar, data on the job market and the economy.
The Dow Jones industrial average traded at a new record-high Friday of 15,000, further signs that the U.S. economy, helped by the Federal Reserve’s commitment to keeping its easy-money policies in place, is on the mend.
While the benchmark gave back slightly in Monday trade, no one was necessarily calling for the end of the upward momentum, even if some corrective action seemed appropriate.
“We’ve come a long way relatively quickly, with no significant pullback or correction,” S&P Dow Jones’ Howard Silverblatt said in a market commentary. “Headline fundamentals are good.”
Among them, first-quarter earnings are “coming in at a record level,” and balance sheets are healthier, although sales are improving slowly, Silverblatt said, noting that it seems the abundance of “good news” of late continues to “be defined as a lack of immediate bad news.
“Typically a pullback permits profit taking, reallocations and results in a more secure base,” he said. “Profits are ripe for the taking, but funds need to be in it to win and there is still a lot of money sitting on the side, making very little in alternative investments.”