ECONOMIC SILUET: ETF Edge newsletter

Kamis, 31 Oktober 2019

ETF Edge newsletter

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THU, OCT 31, 2019

YOUR WEEKLY UPDATE ON TOP ETF TRENDS

A NOTE FROM BOB

Passive funds surpass actively managed funds. It has taken some time, but passively managed funds pegged to indexes have surpassed the assets of actively managed counterparts, Morningstar reports. Passive funds (ETFs and mutual funds) have $4.368 billion in assets by the end of September; actively managed funds slightly less, at $4.268 billion; passive surpassed active only in August. In September, actively managed U.S. stock funds recorded their eighth consecutive month of outflows, according to Morningstar, which also notes that since March 2014, there have only been two months in which actively managed U.S. stock funds saw inflows.

Light volume. Lots of talk about complacency in the markets. New highs for the S&P 500, but it's been on very light volume. Volumes have been lighter across the board--equities, ETFs, options. Large equity ETFs like SPDR S&P (SPY), iShares Core S&P 500 ETF (IVV), Vanguard Total Stock Market ETF (VTI), and Vanguard S&P 500 ETF (VOO), along with the Invesco QQQ (QQQ) and iShares Russell 2000 ETF (IWM), and even international ETFs like iShares MSCI EAFE ETF (EFA) and Vanguard FTSE Emerging Markets (VWO), are all seeing October volumes below normal, particularly in the second half of the month. Traders chalking it up to a bit of exhaustion over endless tweets, uncertainty about direction of China trade, and uncertainty about Fed direction. Maybe that will change in November!

Financial ETFs getting interest. The Fed appears to have successful engineered a steepening of the yield curve in October, and that has made banks and financials market leaders in October with the SPDR Bank ETF (KBE) up 3.5% and the Financial Financial SPDR ETF (XLF) up 2.8%. Hope for a bottoming in Treasury yields may finally be attracting buyers to the space: Bloomberg is reporting the XLF is on track for its best month of inflows since April, garnering close to $1.2 billion in October.

For more analysis and actionable insights, watch me live on Mondays at 1pm ET on ETF Edge.

Bob Pisani
@BobPisani

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