In the last quarter, there was massive sell-off in the markets ETF investors rushed into equity funds as stock markets plunged. However, this is a concern for bulls who are looking for an end to the losses.
Markets plunged in Q1
Markets such as S&P 500 and Dow Jones have dropped significantly this year with most of the plunge coming in the last month. This comes as concerns about the spread of the coronavirus continue to grow across the globe.
Interestingly ETFs attracted around $66.3 billion in the first quarter even with the S&P 500 plunging over 34% to its worst since the 2008 financial crisis. This haul was around $8 billion more of what the ETFs generated in the same quarter last year. Equity funds were leading with an intake of $41.8 billion with fixed income products also adding $11.8 billion.
This year US stocks have lost over $5 trillion in value and Wall Street is determined to find an end to this rout. However, for bulls, a bottom is established once the losses become huge for retail investors to bear. The largest ETF tracking the S&P 500 market witnessed outflows with the Vanguard S&P 500 attracting close to $18.7 billion.
It seems that investors are still looking to establish a bottom according to Miller Tabak & Co equity strategist Matt Maley. Matt stated that it is not easy for bear markets to the bottom unless investors throw in the towel which is a huge concern.
VOO the biggest winner because of investor preference
However, VOO was the biggest winner because retail investors are usually adamant to bail with SPDR S&P500 ETF losing $19.6 billion in the quarter. Most traders prefer this $235 billion ETF because of its high liquidity.
Also, another reason why there was a huge intake in the ETF industry in the quarter might be attributed to the rush for fixed income products. Equally the funds are usually considered as safer options especially during this period when the economy is not faring well.