Retail Traders’ ETF Moves In Sept

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:

*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.

Contact Dan Mika at [email protected], and follow him on Twitter