ETFs Add $6.5B As Inflation Fears Grow

The U.S.-listed ETF industry added nearly $6.5 billion in fresh assets in a shortened trading week between Nov. 19 and Nov. 24, with defensive ETFs gaining steam to play among the large cap funds that tend to dominate inflows.

These figures do not include flow data from Friday, when the Dow Jones Industrial Average suffered an intraday loss of 1,000 points after the World Health Organization declared Omicron a new COVID-19 variant of concern.

Large Caps, Total Market ETFs Keep Adding

The Invesco QQQ Trust (QQQ) led inflows on the period, with $1.16 billion added, while the iShares MSCI USA Momentum Factor ETF (MTUM) and Vanguard Total Stock Market ETF (VTI) added $996 million and $855 million, respectively.

Fears over inflation in the U.S. sent some assets abroad, with the iShares Core MSCI EAFE ETF (IEFA) taking in $822 million.

The Vanguard Mid-Cap ETF (VO) also made a rare appearance on the top of the inflows list, with $644 million added. That’s potentially a bet by investors that smaller companies will be able to manage turbulent inflation shocks better than larger firms.

Gold, Bonds Take Position

Defensive ETFs also peppered the top inflows list, with inflation in mind. The SPDR Gold Trust (GLD) took in $851 million, while the iShares TIPS Bond ETF (TIP) added $615 million.

The iShares 7-10 Year Treasury Bond ETF (IEF) saw $673 million in inflows, and the Vanguard Intermediate-Term Corporate Bond ETF (VCIT) added $410 million.

Growth, Junk Bonds Hammered

The SPDR S&P 500 ETF Trust (SPY) was the biggest loser from flows in the period, as investors pulled nearly $2.5 billion from the oldest ETF in the U.S. The iShares Core S&P 500 ETF (IVV) found itself losing $706 million, as investors lessened their exposure to the index.

High yield bonds were not in vogue either. The iShares iBoxx USD High Yield Corporate Bond ETF (HYG) saw $1.13 billion in outflows, while the SPDR Bloomberg High Yield Bond ETF (JNK) lost $454 million. A key indicator of the spread between high yield bonds and Treasury yields jumped 31 basis points from Nov. 8 to Nov. 19, suggesting bond investors are seeking safer pastures.

Another flight-to-safety play was a combined outflow of $804 million from the iShares Core S&P U.S. Growth ETF (IUSG) and the iShares Russell 1000 Growth ETF (IWF).

For a full list of this week’s top inflows and outflows, see the tables below:

Top 10 Weekly ETF Inflows

Bottom 10 Weekly ETF Inflows