Though the resurgence in coronavirus cases has shaken investors’ sentiment, Wall Street ended up the in green last week. The Dow Jones rose 1% and the S&P 500 gained 1.8%. The Nasdaq outperformed with gains of 4%.
Most of the rally was driven by big technology stocks, especially the big four — Amazon AMZN, Microsoft MSFT, Apple AAPL and Alphabet GOOGL — that surpassed a trillion-dollar market capitalization each for the first time during the COVID-19 pandemic. Additionally, optimism over a COVID-19 treatment added to the strength (read: Big Tech Stocks Top Trillion-Dollar Each: ETFs to Bet On).
Against such a backdrop, ETFs overall gathered about $6.9 billion capital last week, with U.S. fixed income ETFs leading the way higher with $6.5 billion inflows, closely followed by $2.3 billion in international equity ETFs. However, U.S. equity ETFs shed nearly $3.9 billion, per etf.com.
Fixed Income ETFs Shine
The second wave of coronavirus has raised questions over continued recovering economic activities, compelling investors to shift toward safer havens like bonds. As such, iShares iBoxx $ Investment Grade Corporate Bond ETF LQD was a hot product last week, pulling in more than $1.2 billion in assets. This was followed by inflows of $815.2 million for iShares Core U.S. Aggregate Bond ETF AGG. Both funds offer exposure to a broad range of U.S. investment grade corporate bonds.
The SPDR Bloomberg Barclays High Yield Bond ETF JNK and iShares 20+ Treasury Bond ETF TLT has attracted more than $600 million in capital each. The former offers exposure to U.S. dollar-denominated high-yield corporate bonds with above-average liquidity while the latter targets the long-term U.S. Treasury bonds.
Gold ETF Attracts
The two popular gold ETFs — SPDR Gold Trust GLD and iShares Gold Trust IAU — saw inflows of $536 million and $314 million, respectively. Both ETFs track the performance of the price of gold bullion and are backed by a physical asset. The COVID-19 pandemic has raised the appeal for gold as a great store of value and hedge against market turmoil. Additionally, a slew of stimulus form the central bank and government also added to the metals’ strength (read: 5 ETFs & Stocks to Tap Gold’s Best Quarterly Gain in 4 Years).
U.S. Equity ETFs Bleed
While Invesco QQQ QQQ was the most-loved ETF with massive inflows of $2.2 billion last week, iShares Russell 2000 ETF IWM and SPDR S&P 500 SPY saw outflows of $2 billion and $1.5 billion, respectively. QQQ provides exposure to the largest domestic and international non-financial companies listed on the Nasdaq. IWM targets the small-cap segment of the broader U.S. stock market while the SPY measures the performance of the S&P 500 Index.
Vanguard Total Stock Market ETF VTI, iShares Russell 1000 Value ETF IWD and iShares Core S&P 500 ETF IVV also saw outflows of more than $300 million each. VTI provides diversifies exposure across all market caps as well as growth and value styles while IWD targets the value corner of the broad stock market. IVV also tracks the S&P 500 Index (read: S&P 500 Posts Best Q2 in Decades: 10 Best Stocks in ETF).
Surprise Sector ETF Loser
Though the big technology names fueled the stock market last week, investors pulled out assets from the technology ETFs. First Trust Technology AlphaDEX Fund FXL was in the top 10-redemption list, showing capital outflows of $572 million. This fund offers exposure to the broad technology sector by using the AlphaDEX methodology.
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