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Market Correction Has Not Spoiled ETF Investors’ Appetite

This article was originally published on ETFTrends.com.

ETF investors are looking at the equity market correction as a good buying opportunity to get in on the cheap.

Some of the hardest hit areas of the recent sell-off have also been among the most popular areas ETF investors are diving back into. For example, over the past week, the Communication Services Select Sector SPDR Fund (NYSEArca: XLC) , which includes many prominent media and internet names, attracted $972 million in net inflows, according to XTF data. The iShares Russell 2000 ETF (IWM) , which follows the hard hit U.S. small-cap names, brought in $641 million and the VanEck Vectors Semiconductor ETF (SMH) added $514 million.

Additionally, some aggressive traders funneled $354 million into the ProShares UltraPro QQQ (TQQQ) , which mirrors the triple or 300% daily long performance of the tech-heavy Nasdaq-100, over the past week as well.

Best performers so far this year

These growth-oriented areas of the equity market have been among the best performers so far this year, but they were also among the most heavily battered in the selling as investors weighed the potential risk of high valuations in a slowing late business cycle.

"It looks like the trading crowd doing some dip-buying as a result of the recent drop," Eric Balchunas, Bloomberg Intelligence analyst, told Bloomberg News.

"With the volatility, there's an opportunity to make a quick buck," Balchunas added. "There are some people excited about all this because, for a while, everything moved very steadily with no volatility. You can see the trader crowd running around trying all sorts of things."

The pick up in these areas may also reflect investors' renewed appetite for risk after a potentially overdone sell-off.

"Demand for small-cap funds is a good indicator of U.S. risk tolerance as these funds provide diversification to up-and-coming companies," Todd Rosenbluth, director of ETF research at CFRA Research, gold Bloomberg. "They are more exposed to a strong U.S. economy and less connected to overseas trends."

For more information on the ETF industry, visit our ETF performance reports category.

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