The latest weekly ETF flow data reveals investors are rotating way from defensive ETFs that led the way through most of 2013 but are now taking a back seat to cyclical sectors.
Utilities Select Sector SPDR (XLU) was also on the list of ETFs with the biggest redemptions last week.
Stable, dividend-paying sectors such as utilities, consumer staples and healthcare had paced the market since mid-April. Yet the recent outperformance of growth-oriented sectors is seen as a healthy rotation that could help push stocks even higher. [Some Sector ETF Charts Pointing to a Cyclical Rotation]
During the most recent leg of this rally, the utilities, consumer staples and healthcare sectors have all underperformed the S&P 500, says J.C. Parets at the All Star Charts blog.
“Meanwhile, it’s been materials and energy that have led the way,” he notes.
Furthermore, PowerShares S&P 500 Low Volatility (SPLV) and iShares MSCI USA Minimum Volatility (NYSEArc a: USMV) were among the ETF outflow leaders last week. This is another sign that investors are shifting away from defensive ETFs. [Are High-Beta Funds the Next Low-Volatility ETFs?]
Source: IndexUniverse, ETF flow data May 6-May 10.
Source: All Star Charts.