VOO, SPY & JEPI Top Readers' Year-End ETF Searches
Plain vanilla investing has taken the lead in the final stretch of 2023.
As illustrated by the fourth-quarter search history on etf.com, investors are showing increased interest in less-flashy strategies such as the $359 billion Vanguard 500 Index Fund (VOO), the $445 billion SPDR S&P 500 ETF Trust (SPY) and the $221 billion Invesco QQQ Trust (QQQ).
According to Bloomberg Intelligence ETF analyst Eric Balchunas, it comes down to performance.
“Those strategies are normally vanilla ETFs, but this year, they’re extraordinary,” he said. “Take any trading strategy out there, any factor, and those funds likely beat them.”
With both the S&P 500 ETFs cranking out gains this year in the 25% range and the tech-heavy QQQ up more than 52%, Balchnuas said plain vanilla was the “shiny object” this year.
Other top searches over the past three months included the $49.9 billion Schwab US Dividend Equity ETF (SCHD) and the $30.5 billion JPMorgan Equity Premium Income ETF (JEPI).
“JEPI and SCHD are linked because people want exposure to the markets with some income, and Income is always popular,” Balchunas said.
The conservative but popular JEPI has gained 9.5% this year, and SCHD is up 2.3%.
Along With VOO & SPY, JEPI Draws Attention
Against a backdrop of expected Federal Reserve rate cuts in the year ahead and a more bullish outlook for long-only equity strategies, Morningstar analyst Ryan Jackson expects the appeal of covered-call strategies like JEPI to slow in the year ahead.
“While the search traffic for JEPI remains strong, the flows into it are slowing,” he said, citing the $90 million that went into the ETF in November, representing its lowest one-month inflow since December 2020 when fund was just 8 months old.
“It does seem that JEPI-mania is dying down,” he added.
The final top search for the fourth quarter was the $47.4 billion iShares 20+ Year Treasury Bond ETF (TLT), a story that has perplexed market watchers all year.
With nearly $23 billion worth of net inflows in 2023, TLT emerged as the riddle of the year by ranking third among all ETFs in terms of inflows even though it spent most of the year in decline.
But after falling by about 19% this year through mid-October, TLT finally started giving investors what they were hoping for with a 16% gain since the October bottom.
“TLT was the Fed trade of the year,” said Balchunas, referencing bets that the Fed would give the nod toward interest rate cuts, which it did this week.
“Nobody is going to into TLT for yield, you’re taking it because you thought the Fed would break something,” he added. “It’s working now but for the first eight months it was a shipwreck.”
Contact Jeff Benjamin at Jeff.Benjamin@etf.com and find him on X at @BenjiWriter
