Fund Flows to Financial ETFs Hint at Possible December Rate Hike
Fund flows to KBE
Exchange-traded fund investors have added $33.5 million to the SPDR S&P Bank ETF (KBE) during October 2015. So far in 2015, investors have plowed $129 million into KBE. During the week ended November 6, KBE had outflows of $10.7 million.
Shares of KBE have generated returns of 8.4% year-to-date, outperforming the Financial Select Sector SPDR ETF (XLF) as well as the broad markets. In the past month, KBE has returned 6.9% due to increased optimism in the financial sector after the increased possibility of a rate hike by the Fed in December.
Changes in institutional investors’ holdings in 2Q15
Despite the negative flows to the KBE ETF last week, 13F filings of major institutional asset managers for the second quarter of 2015 offered a positive picture.
In 2Q15, trade activity by 13F filers displays a 10.6% increase in aggregate shares held by institutional investors and hedge funds. Among the 135 13F filers holding KBE, 36 funds reduced their exposure to the fund, while eight funds sold all their holdings. However, 36 funds created new positions and 39 funds increased their exposure to KBE.
Major institutional holders like Franklin Resources (BEN), Morgan Stanley (MS), JP Morgan Chase (JPM), and UBS bought shares of KBE during 2Q15. Meanwhile, institutional investors like Psagot Investment House, Susquehanna International Group, SG Americas, and Visium Asset Management significantly reduced their exposure to KBE.
Browse this series on Market Realist: