Never miss a story from Peter Hanks

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Peter Hanks

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Stock Market Fund Flows Talking Points:

  • Broad-market ETFs SPY, IVV and VOO notched $4.5 billion in outflows for the week
  • The XLV healthcare ETF recorded a near-record intraday inflow as the S&P 500 began its retreat
  • See Q1’19 forecasts for the Dow, Dollar, Bitcoin and more with the DailyFX Trading Guides.

Stock Market Fund Flows: S&P 500 Retreat Sparks Demand for Defensives

Amid a tumultuous week for the S&P 500 and other US equity markets, fund flows reveal that investors reduced exposure to the broad-market tracking ETFs of SPY, IVV and VOO. Together, the three funds notched $4.5 billion in outflows which marks the first week of net outflows in a month. The week also stands as the fifth week of net outflows for the year to date, despite a simultaneous 8.65% gain for the S&P 500.

Aggregate Fund Flows for Broad Market ETFs versus S&P 500 (Chart 1)

SPY ETF price chart

High-Yield Corporate Debt Sees Capital Flight

A sector-specific look into fund flows showed investors were eager to ditch their exposure to high-yield corporate debt, a recent high-flyer in the ETF space. This week however, the HYG ETF saw $108 million exit the fund. While somewhat minor, the week of net outflows marks the second such week after the fund saw its largest intraday outflow in over two months last Wednesday. Prior to the late-February outflows, the fund enjoyed a month of consecutive inflows.

HYG ETF Fund Flows (Chart 2)

HYG etf price chart

Learn tips and tricks to day trading the S&P 500

Defensive Sectors Gain Traction

While broad-market and high-growth ETFs saw capital shift elsewhere, the defensive healthcare sector posted considerable inflows. Specifically, the XLV ETF realized its second largest intraday inflow ever on Thursday. The flow was dwarfed only by December 12th when the fund saw $786 million enter its coffers just days before the worst of December’s equity rout.

XLV ETF Fund Flows (Chart 3)

XLV etf price chart

The considerable demand for healthcare exposure is indicative of a risk-off mood in the ETF sector, echoed by investors’ decision to shed exposure to the riskier HYG. While prior extreme fund flows have not always preceded a deeper decline, the concerted flight to XLV this week suggests some investors believe the S&P 500 has more ground to give.

Read more: Will the Stock Market Crash in 2019?

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.