By: Spencer Israel
If fund flows are any indication, investors are bullish U.S. stocks at a record-setting pace.
U.S. stock ETFs took in about $199 billion of inflows during the first quarter according to Morningstar, a new record. For context, the group took in just under $232 billion in all of 2020.
Put another way, ETFs that offer exposure to U.S. stocks took in almost as much money as every other asset class in the ETF universe combined last quarter.
Looking at the list of the top 10 non-leveraged funds with the most inflows in the first quarter shows no clear discernable pattern—other than that investors seemed to want stock funds.
Broad-based funds like the Vanguard S&P 500 ETF (VOO), Vanguard Total Stock Fund (VTI), and iShares Core S&P ETF (IVV) all made the list, as did more targeted funds like the Financial Select Sector SPDR Fund (XLF) and Ark Innovation ETF (ARKK).
A couple of international stock funds also made the list, as the group experienced the second greatest number of inflows last quarter at $82.5 billion.
Compare that with the top ten ETFs with the most outflows for the first quarter.
Obviously, fixed income ETFs took a backseat last quarter as yields rose. As a result, a number of bond funds saw substantial outflows.
Also, note flows between growth and value. The Vanguard Value ETF (VTV) took in nearly $4.7 billion while the iShares Russell 1000 Growth ETF (IWF) lost $1.8 billion, another clear sign that investors are favoring value stocks for the first time in years.
It’s also worth pointing out that for all the grief Cathie Wood and Ark Invest catch, their flagship fund still took in more money than all but five ETFs last quarter. Even though their performance hasn’t been there the past two months, it doesn’t appear as if the market has abandoned her yet.
The author is long VOO in his retirement account.
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