ETF Asset Report December
Wall Street witnessed an upbeat December due to moderation in inflationary pressures, the likelihood of Fed rate cuts in 2024 and decent corporate earnings. All key U.S. equity gauges — the S&P 500, the Dow Jones, the Nasdaq and the Russell 2000 — gained 1.8%, 1.6%, 2.2% and 4.20%, respectively, in the past month (as of Dec 27, 2023).
As far as rates are concerned, the benchmark treasury yield started the month at 4.22% and was at 3.79% at the end of Dec 26, 2023. Against this backdrop, below we highlight a few ETFs that fetched sizable assets in December.
S&P 500 ETFs Win
SPDR S&P 500 ETF Trust SPY, iShares Core S&P 500 ETF IVV, Vanguard 500 Index Fund ETF VOO and Invesco S&P 500 Equal Weight ETF RSP amassed about $42.39 billion, $6.22 billion, $2.84 billion and $4.54 billion in December, respectively. A solid rally in the S&P 500 in December probably lured investors to focus on the S&P 500 ETFs as risk-on sentiments returned to the market. As the participation in the market broadened, RSP has received special attention from investors. Vanguard Total Stock Market ETF VTI also fetched about $2.83 billion in assets in the quarter.
Small Caps in Vogue
The small-cap ETF, iShares Russell 2000 ETF IWM, has attracted about $3.81 billion in assets. This renewed interest can be attributed to several factors, including the likelihood of a dovish Fed, strong consumer confidence, positive jobs data, and attractive valuations, all of which have bolstered the small-cap segment. As a result, the fund, IWM, has seen a significant increase in assets.
Long-Term Bonds Are Back
iShares 20 Plus Year Treasury Bond ETF TLT,Vanguard Intermediate-Term Corp Bond Index Fund ETF (VCIT) and iShares Core US Aggregate Bond ETF AGG hauled in about $2.10 billion, $4.27 billion and $2.83 billion, respectively. As the Fed rate cut hopes strengthened for 2024, bond yields slumped and revived investors’ interest in long-term bond ETFs all over again.
Short-Term Bond ETFs Fell Out of Favor
The federal funds rate is currently 5.25% to 5.50%. The monetary policymakers forecast that their key short-term rate will reach 3.9% to 5.4% by the end of 2024, down from the September projections of 4.4% to 6.1%. This suggests that the Fed is prepared to cut its benchmark rates by an additional three-quarters of a point until the end of 2024.
This has probably cut demand for short-term bond ETFs like SPDR Bloomberg 1-3 Month T-Bill ETF BIL, iShares 1-3 Year Treasury Bond ETF SHY, iShares 7-10 Year Treasury Bond ETF IEF and iShares Short Treasury Bond ETF SHV. BIL, SHY, IEF and SHV have lost about $2.67 billion, $1.98 billion, $1.82 billion, and $1.59 billion, respectively.
Nasdaq-100 Loses Assets
Invesco QQQ Trust Series 1 QQQ lost about $5.0 billion in the month. Overvaluation concerns after a stupendous rally in 2023 and the broadening of the market breadth probably caused the Nasdaq-100 to fall out of favor.
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iShares 20+ Year Treasury Bond ETF (TLT): ETF Research Reports
Invesco QQQ (QQQ): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares 7-10 Year Treasury Bond ETF (IEF): ETF Research Reports
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
Vanguard S&P 500 ETF (VOO): ETF Research Reports
Invesco S&P 500 Equal Weight ETF (RSP): ETF Research Reports
iShares Core U.S. Aggregate Bond ETF (AGG): ETF Research Reports
iShares Short Treasury Bond ETF (SHV): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
iShares 1-3 Year Treasury Bond ETF (SHY): ETF Research Reports
Vanguard Intermediate-Term Corporate Bond ETF (VCIT): ETF Research Reports
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): ETF Research Reports
