If the Dow takes a dive of 30%, guess what? your equity ETF is likely going to take a dive, too. Tom Roseen More Quotes by Tom Roseen More Quotes From Tom Roseen Lower rates aren't good for money market funds, but the flows this week represented a flight to safety, investors were just looking for a good place to hide. Tom Roseen money Interestingly, despite the 10-year Treasury yield closing at 1.71% yesterday - its lowest closing value since November 4, 2016 - authorized participants and ETF investors were net redeemers of taxable bond ETFs at negative $5.7 billion, with the second-largest net redemption occurring in our government-Treasury macro-group at negative $1.6 billion, keep in mind that normally there is an inverse relationship between yield and price. The average government-Treasury ETF posted a 1.69% return for the fund-flows week ended August 7, 2019. Tom Roseen money Despite plus-side equity returns, both fund investors and ETF investors were net redeemers of equity assets, redeeming a net $8.4 billion for the week, shrugging off progress in the U.S.-China trade talks, a nice start to the Q2 earnings season, and general agreement on the U.S. budget and ceiling, investors showed constraint after learning that Iran had seized a British oil tanker in the Strait of Hormuz, increasing geopolitical concerns. Tom Roseen money Both fund and ETF investors padded the coffers of taxable and tax-exempt bond funds, investing net new money in longer-dated issues. Tom Roseen money They were selective, however, padding the coffers of Invesco QQQ Trust Series 1 with plus-$2.6 billion and iShares Core S&P 500 ETF with plus-$1.7 billion, while being net redeemers of SPDR S&P 500 ETF Trust with $1.8 billion of cash withdrawals. Tom Roseen money Interestingly, though, we saw retail investors being net redeemers of equity funds at negative $4.9 billion, while authorized participants were net purchasers of equity ETFs at plus $9.4 billion. So once again it was a tale of two cities. Tom Roseen money So if one removes those from the picture, it was a fairly tame week, with the risk-off trade really being the net flows into money market funds, that said, we did see authorized participants being net redeemers of equity ETFs to the tune of $3.2 billion, which is their third weekly redemption in four, while being net purchasers of fixed income ETFs for the third consecutive week, this week injecting $1.1 billion. Tom Roseen money Outflows for both equities and bonds were influenced by two significant liquidations during the week. Tom Roseen money Despite the S&P 500 setting three record closes during the fund-flows week, investors remained on the equity sidelines after learning about disappointing Q1 revenue growth from stalwart Alphabet, there was a split once again between mom-and-pop investors and authorized participants. Equity mutual funds witnessed outflows of $5.5 billion, while equity ETFs took in $3.7 billion during the fund flows week. Tom Roseen money While investors were keeping a keen eye on the FOMC (Federal Open Market Committee) meeting, which concluded on Wednesday on a more hawkish note than some anticipated, taxable-fixed income mutual funds took in small amounts of net new money - $348 million-plus, with ETF investors ... withdrawing $700 million, interestingly, though, both investors types were net purchasers of municipal bond funds, injecting $877 million into conventional open-end funds and $314 million for ETFs, respectively. Tom Roseen money The Federal Reserve's dovish tone in its March meeting minutes along with tame wage growth numbers and news that the IMF lowered its outlook for global economic growth to 3.3% for 2019 were boons for longer-dated bond securities, investors were betting that neither the Fed nor other central banks were likely to hike rates anytime soon. Tom Roseen money We had strong returns this week, but the mutual fund and [exchange-traded fund] investors weren't buying it, i don't think it's concerning at all but it tells us investors were taking some of that hard-won profit off the table. Tom Roseen company-news Some people are concerned with global growth, but the Fed does have room as far as the U.S. economy goes. Tom Roseen company-news Although I am thinking that at least from a funds perspective - excluding ETF (exchange-traded fund) flows - that decision was made a week or two ago, the average equity fund lost 2.42 percent for the flows week. Tom Roseen money I guess investors shrugged off the news about the benchmark 10-year Treasury yield closing above 3 percent for the first time since December 27, 2013, and focused on the economics and strong first-quarter earnings season so far. Tom Roseen money So it wasn't like investors totally ignored the rising rates this week. Tom Roseen money Investors had been down on gold for such a long period of time. Tom Roseen company-news The flight to safety was a bit mixed. Tom Roseen company-news The theme is Brexit, and people are concerned. Tom Roseen company-news Investors have been trying to find places to hide. Tom Roseen company-news
