3 Takeaways From SPY’s $8 Billion One Day Haul

The SPDR S&P 500 (SPY) had a blockbuster day Wednesday, seeing inflows of $8.2 billion in one day. That’s the ninth largest one-day intake in the fund’s 24-year history, and the largest creation since December 2014.

These assets have gone hand in hand with a solid performance (see the one-year chart below), and have picked up pace since the election last November. 

Chart courtesy of StockCharts.com

What does it mean? Put simply, it could mean that the ETF veteran is one of the most popular “Trump trades” there is. Matt Bartolini, head of SPDR Americas Research at SSGA, offered these three key insights:

1) The driver is bullish sentiment post-election.

SPY’s massive haul on Wednesday is actually a “continuation” of inflows the fund—and other U.S. equity ETFs—has seen since the presidential election last November. Some may even say SPY is one of the popular Trump trades.  

SPY has now taken in about $24 billion since the election. And that’s significant if for no other reason than a seasonality perspective alone. SPY typically doesn’t do well in terms of flows in the first quarter of every year. The fund has been known to have some of its weakest inflows in January and February, which makes the ongoing creations that much more meaningful.

“This is definitely a market-driven effect,” he said. Wednesday’s haul followed President Trump’s first address to Congress Tuesday, which many interpreted to be very pro-growth, and on script. Investors seem to be increasingly bullish about the U.S. market, pushing SPY to buck its seasonal trend. 

2) We’ve been here before … or have we?

Wednesday’s creations were the largest the fund has seen since December 2014. There is an interesting parallel between the market environment now and back then. That month, SPY took in more than $18 billion in net assets, as U.S. equity ETFs raked in some $45 billion.

Then, too, investors were bullish on the U.S. economy, anticipating rate hikes as the economy improved. Today we are again on the verge of another rate hike, possibly as soon as this month.

“There’s definitely a parallel, but this time it’s different,” he said. “We’re living this abnormal environment with the markets reacting to this relay race where monetary policy is passing the baton to fiscal policy.”

This time around, he says, a hawkish Fed is fueling expectations for fiscal spending on growth, and is helping foster bullishness about where the country is headed.

3) Every type of investor is using SPY

SPY is the largest and most liquid ETF in the world. It’s also the most traded vehicle on most days. The inflows since the election are showing that SPY is one of the capital markets’ and investors’ favorite tools to express their opinion on the U.S. equity market.

It’s not just a fund used by day traders—with nonsticky assets. It’s being used by retail, advisory and institutional investors alike. There’s a massive amount of money looking to allocate to the U.S., Bartolini says, and sometimes that money is being used tactically, sometimes long term. 

Going forward, $8 billion in one day might not be a stand-alone event if the market continues to drive investor demand for U.S. equity exposure on a fuel consisting of a pro-growth agenda and fiscal spending, Bartolini says.

“SPY’s flows will be market-driven,” he noted.

Contact Cinthia Murphy at [email protected]