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Weekly ETF Roundup: U.S. Equity Attracts, Gold Loses

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Sweta Killa
·5 min read
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The soaring stock market has been increasing investors’ risk appetite. After recording a historic rally in November, the U.S. stock market is showing no signs of slowdown. All the three major indices closed at record highs last week (read: S&P 500 Set to Climb Higher in 2021: Bet on These ETFs).  

The slew of encouraging reports on the effectiveness of COVID-19 vaccines has raised hopes for global economic recovery, instilling huge confidence among investors. Additionally, the latest jobs data for November revealed the slowest U.S. jobs growth in six months that has spurred expectations for a new fiscal relief bill to help revive the coronavirus-hit economy.

Against such a backdrop, ETFs overall gathered about $10.9 billion capital last week, bringing in year-to-date inflows of $441.6 billion, ahead of the $280.2 billion seen at this same time a year ago. In fact, 2020 has been on track to be the greatest year for ETF inflows. International equity ETFs led the way higher last week with $6.2 billion inflows, closely followed by $3.5 billion in U.S. fixed income ETFs and $1.7 billion in U.S. equity ETFs, per etf.com.

U.S. Equity Shines

Though international equity ETFs garnered maximum capital last week, most of the U.S. equity ETFs dominate the list of the top 10 creations. Invesco QQQ QQQ was the most-loved ETF with massive inflows of $1.1 billion last week, followed by $988 million in iShares Russell 2000 ETF IWM. QQQ, having a Zacks ETF Rank #1 (Strong Buy), provides exposure to the largest domestic and international non-financial companies listed on the Nasdaq. IWM targets the small-cap segment of the broad U.S. market and has a Zacks ETF Rank #3 (Hold) (read: 5 Hot ETFs of November to Continue Gaining Investor's Love).

Vanguard Total Stock Market ETF VTI pulled in $586 million in capital while iShares Core S&P 500 ETF IVV attracted $448 million in its asset base last week. VTI provides diversified exposure across all market caps as well as growth and value styles, while IVV measures the large-cap segment of the broad U.S. market. The former has a Zacks ETF Rank #3 while IVV has a Zacks ETF Rank #2 (Buy).

Fixed Income Rocks

Under this category, iShares 20+ Treasury Bond ETF TLT was a hot product last week, pulling in more than $653 million in assets. This was followed by inflows of $592 million for iShares TIPS Bond ETF TIP and $531 million for iShares Core U.S. Aggregate Bond ETF AGG. TLT provides access to long-term U.S. Treasury bonds and has a Zacks ETF Rank #3. TIP offers exposure to U.S. TIPS, which are government bonds whose face value rises with inflation while AGG offer exposure to a broad range of U.S. investment grade corporate bonds.

The twin expectations that the stimulus will lift inflation and the economy will provide a boost to the corporate bonds has lead investors to these ETFs.

Financials Tops, Consumer Staples Flops

Vaccine optimism has brought back the lure for the cyclical sector ETFs like Financial Select Sector SPDR Fund XLF. This is because cyclical sectors are tied to economic activities and thus outperform when economic growth improves (read: Cyclical Sector Outperforming: 6 Cheap ETFs to Track).

XLF seeks to provide exposure to companies in the diversified financial services, insurance, banks, capital markets, mortgage real estate investment trusts ("REITs"), consumer finance, and thrifts and mortgage finance industries. It has attracted $469 million in its asset base, propelling its AUM to $23 billion. The fund has a Zacks ETF Rank #2.

Being a defensive scetor, Consumer Staples Select Sector SPDR Fund XLP saw outflows of $282 million and has a Zacks ETF Rank #3.

Gold ETFs Bleed

The two popular gold ETFs — iShares Gold Trust IAU and SPDR Gold Trust GLD — saw outflows of nearly $300 million each. Both ETFs track the performance of the price of gold bullion and are backed by a physical asset. Vaccine optimism and a surging stock market has diminished the appeal for gold as a store of value and hedge against market turmoil. The duo has a Zacks ETF Rank #3.

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iShares 20 Year Treasury Bond ETF (TLT): ETF Research Reports
 
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
SPDR Gold Shares (GLD): ETF Research Reports
 
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
iShares Gold Trust (IAU): ETF Research Reports
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
iShares TIPS Bond ETF (TIP): ETF Research Reports
 
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
 
iShares Core U.S. Aggregate Bond ETF (AGG): ETF Research Reports
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
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Zacks Investment Research
 
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