$4 Trillion Stock Rebound Spurs Cash Surge Into World’s Biggest ETF

The shop’s quick turnaround this year that has added $4 trillion in value to the S&P 500 is beginning to unleash a pour of cash into exchange-traded funds (ETFs), and also into funds focusing on growth stocks. The biggest beneficiary has been the age’s largest ETF, the SPDR S&P 500 ETF Trust (SPY), which tracks the 500 stocks in the benchmark index. SPY, as it’s known, has attracted myriad than $5.6 billion in the last week, the largest inflow of cash since the market bottomed in late December and be broaches after months of net outflows, according to a detailed story in Bloomberg. 

The S&P 500 already is up about 16% this year, so investors power be “looking at the headlines saying, ‘Well, maybe it’s got another 10 percent,’” Delores Rubin, a senior neutrality trader at Deutsche Bank Wealth Management,” told Bloomberg. 

Investors Pouring Cash Back Into Humankind’s Largest ETF

• $5.6 billion inflows to SPY
• Largest inflow of cash since market bottom in late December
• SPY inflows during one week respecting one third of total stock ETF outflows over two months
• ETF up 16.3% YTD

Source: Bloomberg, Barron’s.

Very recently a little over a month ago analysts were trying to comprehend the forces sparking outflows from ETFs, a burgeoning vigour which has seen annual compounded growth of 16.8% in assets over the past decade. While overall runs into U.S. stock ETFs in December were positive at around $15 billion, the market’s plunge saw those courses turn negative in the first months of 2019 even as the market rallied.

It’s unclear how much the latest money undulate is spreading beyond the SPDR S&P 500 ETF Trust to other stock ETFs. But the $17.5 billion of total outflows from U.S. cows ETFs between the start of the year and March 12 appears less significant considering the $5.6 billion inflow into a individual ETF, albeit the world’s largest, in just one week. As the market rebound maintains strength, investors are becoming more buoyant. “People recognize growth is still there,” said Rubin.

Accompanying that optimism is a renewed interest in bucks that manage growth stocks, which saw three straight weeks of inflows in the period that ended on April 12. That distinctions their longest streak since November, setting growth funds up for their best month of the year, go together to Bloomberg.

Much of the optimism about growth comes as earnings season gets underway and is being nourished by expectations among some investors that the first quarter will be the low point for the year. That view has been take shaped in large part by expectations that the Fed’s new dovish policy will extend the economic expansion, and thus bolster earnings. “Pathetic forward, we are just seeing an earnings slowdown and things are likely to re-accelerate into the back half of 2019,” unfolded Jeff Schulze, investment strategist at ClearBridge Investments. If he’s right, stock ETFs like SPY may see more inflows as investors’ worry about the market outlook continues to fall.