2023-12-01 22:53:45
Exchange-traded funds (ETFs) had a banner month in the United States in November, with assets hitting a record $7.65 trillion, State Street Global Advisors said Friday.
ETF investors aggressively bought “risky” assets in November as “the switch flipped,” said Matthew Bartolini, head of SPDR Americas research at State Street, citing falling bond yields. interest and renewed confidence in the economic outlook.
Signs of slowing inflation fueled bets that the Federal Reserve would begin easing its restrictive monetary policy sooner than expected, helping the S&P 500 post its biggest monthly gain in more than a year in November. year.
The benchmark 10-year US Treasury yield, which moves inversely to price, recorded its biggest drop in more than a decade in November.
Investors’ renewed appetite for risk is reflected in the popularity of high-yield bonds, which saw a record inflow of $11 billion, Bartolini said.
Investors have also rediscovered sector funds, directing some $7.5 billion to these ETFs in November. That helped reverse regarding half of the outflows from the previous 10 months, Mr. Bartolini said.
Treasury bond ETFs were regarding the only segment with significant outflows in November, according to data from a monthly report released Friday by the team of strategists at Citi Research, a division of Citigroup.
The iShares 3-7 Year Treasury Bond ETF saw outflows of $920 million, while the iShares 1-3 Year Treasury Bond ETF lost $1.1 billion, according to the Citi report.
Yet in terms of prices, “everything has recovered, including bonds, which recorded their best returns since 1980, and bond ETFs,” Mr. Bartolini noted.
According to analysts and market participants, the lion’s share of November’s outflows were focused on ultra-short-term fixed income securities. These ETFs, tied to Treasuries and other fixed-income securities expiring in just three to six months, “experienced a rapid change in sentiment in November,” Mr. Bartolini said.
In the first 10 months of 2023, ETFs in this group attracted $50 billion in assets, before losing $7.1 billion in outflows in November, he added.
Another 61 ETFs debuted in November, bringing the year-to-date total to 452 and putting ETF launches on track to set a new record in 2023, Mr. Bartolini and other analysts. In 2021, the industry launched 475 ETFs, the previous record.
“It is likely that new funds will arrive throughout December,” said Todd Rosenbush, ETF analyst at VettaFi. (Reporting by Suzanne McGee; Writing by Ira Iosebashvili and Richard Chang)
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