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SPY ETF Notches Largest Outflow in 2019, HYG Finds Buyers

SPY ETF Notches Largest Outflow in 2019, HYG Finds Buyers

Peter Hanks, Strategist

SPY & HYG ETF Flows:

SPY ETF Notches Largest Outflow in 2019, HYG Finds Buyers

The SPY ETF saw roughly -$4 billion leave its coffers on Thursday as investors looked to take profit after the underlying S&P 500 tagged a record high. While it could be argued the outflow is indicative of waning demand, profit-taking is the more likely culprit as other risk asset-tracking funds saw considerable inflows following the dovish tone put forth by Fed Chairman Powell on Wednesday.

SPY ETF Fund Flows and S&P 500 Price Chart

SPY ETF Notches Largest Outflow in 2019, HYG Finds Buyers

Data source: Bloomberg

Further, other broad-market tracking ETFs posted flows that were within range and largely insignificant. In aggregate, the SPY, IVV and VOO funds recorded roughly -$3 billion in outflows – with the latter two funds experiencing net inflows for the week. Meanwhile, the high-yield corporate debt ETF, HYG, notched a series of robust inflows.

SPY, IVV, VOO ETF Fund Flows and S&P 500 Price Chart

SPY ETF Notches Largest Outflow in 2019, HYG Finds Buyers

Data source: Bloomberg

Recording an inflow of $1 billion on Thursday, the HYG ETF added to its considerable capital haul for the week with a weekly net flow of $1.25 billion. As of Friday, the fund posted its largest weekly net inflow since early January when the fund received $1.8 billion in fresh capital. The flows are indicative of a risk-on attitude that would align with the continuation of relaxed monetary policy from the Federal Reserve. Similar sentiment was echoed in the JNK ETF.

HYG ETF Fund Flows and S&P 500 Price Chart

SPY ETF Notches Largest Outflow in 2019, HYG Finds Buyers

Data source: Bloomberg

JNK, which also provides exposure to high-yield corporate debt, currently boasts its longest streak of net inflows over the last year and a half. At 11 consecutive sessions, the consistent demand has seen $1.8 billion enter the fund. With the monetary policy path of the Federal Reserve seemingly locked in, investors have expressed a renewed appetite for riskier-allocations. Despite the outflows from SPY, the replenished demand for risk could signal investors’ willingness to continue the recent trend in the S&P 500.

JNK ETF Fund Flows and S&P 500 Price Chart

SPY ETF Notches Largest Outflow in 2019, HYG Finds Buyers

Data source: Bloomberg

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

Contact and follow Peter on Twitter @PeterHanksFX

Read more: S&P 500 Posts Largest Gap Higher in 6 Months, VIX Follows Suit

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