ETF Areas That Gained Investors Favor in Virus-Infected March
The rapid spread of the coronavirus sent Wall Street into a bear market territory in mid-March, instigated mammoth monetary and fiscal policy easing around the world, sent the S&P 500 and the Dow Jones on their way toward the worst first-quarter ever and the small-cap Russell 2000 toward its worst quarter ever.
“The entry into bear market territory was the fastest on record for the S&P and Nasdaq,” as indicated by the Dow Jones Market Data Group. Global markets have been shaky since the start of March but the pain aggravated on Mar 11 after WHO declared the outbreak as a global pandemic.
With people on quarantine in various parts of the globe and activities slowly coming to a halt, recession fears are tightening its grip on markets. Oil prices were on a freefall, with United States Oil Fund LP USO and United States Brent Oil Fund LP BNO losing about 56.7% and 51.7%, respectively, in March. However, U.S. stimulus to the tune of $2 trillion finally offered Wall Street the much-needed support last week (read: 5 Top Leveraged ETFs of Last Week).
Against this backdrop, one must look out for ETF areas amassing assets in March. Below we highlight a few such areas (per etf.com).
U.S. Equities
SPDR S&P 500 ETF Trust SPY and Vanguard S&P 500 ETF VOO have added about $11.3 billion and $5.77 billion in assets, respectively. As the S&P 500 has been extremely battered, investors tapped its cheaper valuation. The tech-heavy Invesco QQQ Trust QQQ and Vanguard Total Stock Market ETF VTI also attracted about $6.52 billion and $3.1 billion in assets, respectively.
Short-Term Treasuries
SPDR Bloomberg Barclays 1-3 Month T-Bill ETF BIL, iShares 1-3 Year Treasury Bond ETF SHY and iShares Short Treasury Bond ETF SHV added about $8.91 billion, $7.05 billion and $3.08 billion, respectively. Liquidity is the need of the hour as financial markets have seen turbulent times of late. So, short-term bond ETFs like BIL and SHY that yield about 1.89%, 2.02% and 2.08% annually, respectively, amid a very low yield environment garnered solid investor interest.
Investment-Grade Corporate Bond ETF
Failing to contain the coronavirus-led acute market rout by its crisis-era policy launch, the Fed announced a fresh set of stimuli on Mar 23. The Fed added that the purchases of Treasury and mortgage securities are unlimited.
Among other steps, the Fed confirmed it would buy investment-grade exchange-traded funds that track the corporate bond market, a first for the U.S. central bank. However, the Fed cannot own more than 20% of any one ETF or 10% of individual corporate bonds.
The announcement has led iShares iBoxx USD Investment Grade Corporate Bond ETF LQD to haul in solid assets in late-March. Overall, the fund gathered about $3.86 billion in assets in the month (read: All-Out Fed Support: Buy Highly-Rated Corporate Bond ETFs).
Oil
All was not bad in the oil patch. WTI crude ETF United States Oil Fund LP USO garnered about $1.74 billion in assets worth $1.74 billion in the month. Excessively battered price and a volley of global stimulus probably lessened energy investors’ fear about global economic crisis and the associated decline in oil demand.
High-Yield Bonds
iShares iBoxx USD High Yield Corporate Bond ETF HYG gathered about $2.99 billion assets in the month. In short, the fund has seen inflows whenever risk-on sentiments prevailed in the market. It raked in cash at the start of the month and at the end. HYG’s 5.67% yield is pretty lucrative at the current low-rate environment (read: Most Actively Traded ETFs Over the Past 20 Days).
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SPDR S&P 500 ETF (SPY): ETF Research Reports
Invesco QQQ (QQQ): ETF Research Reports
iShares iBoxx $ High Yield Corporate Bond ETF (HYG): ETF Research Reports
United States Oil ETF (USO): ETF Research Reports
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD): ETF Research Reports
United States Brent Oil ETF (BNO): ETF Research Reports
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
Vanguard S&P 500 ETF (VOO): ETF Research Reports
iShares Short Treasury Bond ETF (SHV): ETF Research Reports
SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL): ETF Research Reports
iShares 1-3 Year Treasury Bond ETF (SHY): ETF Research Reports
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