September’s schizoid flows story looks like it will end with near-record inflows.
Investors have so far poured a net of about $32 billion into U.S.-listed ETFs in September, with the bigger demand centered on U.S. equities, putting overall creations this month on track to be the strongest month of ETF creations since July, when about $41 billion flowed into ETFs.
To be fair, September has told a tale of torn investor confidence in the equities space. In the first and last weeks of the month, investors actually yanked more than $15 billion from U.S. equities funds—outflows that were offset by net inflows of more than $30 billion in the two midmonth weeks.
In all, total U.S.-listed ETF assets are now hovering around $1.575 trillion, up 6 percent, or some $88 billion from end-of-August total assets, reflecting flows and price appreciation. Year-to-date through Sept. 26, total inflows into U.S.-listed ETFs were $133 billion, according to data from ConvergEx Group, the New York-based trading technology firm. In the third quarter, inflows so far totaled $59 billion, ConvergEx said.
“ETFs have become an important go-to investment class for a variety of investors, from sophisticated hedge funds to mom-and-pop retail accounts,” Nicholas Colas, ConvergEx’s chief market strategist, said in a recent research note.
“Essentially, ETFs are to capital markets what Google Trends is to the Internet,” Colas said, reprising a view that understanding what’s going on in the world of ETFs is to understand what’s going on in investment markets and the macroeconomy.
Like ConvergEx’s data, the tally compiled by IndexUniverse takes into account asset flows until Sept. 26, so it excludes any movement taking place in the last two business days of the month. That’s important, because a lot of repositioning tends to take place in that end-of-month stretch. Funds like the SPDR S&P 500 (SPY| A-99), for instance, had gathered a net of $6.81 billion through Sept. 26, just to bleed more than $1.1 billion on Sept. 27 alone. In other words, the final flows data for all of September could be significantly different from the current estimate.