Record $23 billion flees world's largest ETF

SPDR S&P 500 exchange-traded fund saw outflows amounting to 8% of its total assets amid last week's market mayhem.

Feb 12, 2018 @ 10:35 am

By Bloomberg News

Investors actively abandoned the world's biggest passive fund during the onset of market mayhem.

The SPDR S&P 500 exchange-traded fund (SPY) suffered a record $23.6 billion in outflows last week amid the worst momentum swing in history for the underlying U.S. equity benchmark.

The outflows amounted to 8% of the fund's total assets at the start of the week, a rate of withdrawals not seen since August 2010. A blowup in volatility-linked products sent markets haywire, eliciting waves of risk aversion from jittery investors.

Strategists at JPMorgan said the swiftness and severity of the positioning unwind is a sign that further selling from the likes of commodity trading advisers and risk parity funds "should be limited from here."

"The picture we are getting in the U.S. equity ETF space is one of advanced rather than early state de-risking," they added.

The five-session stampede for the exits erased the previous nine weeks of inflows into the fund, which is issued by State Street. The combination of price declines and withdrawals erased $38.6 billion in SPY's assets. That's nearly double the second-worst showing of $19.4 billion in asset shrinkage during the week ending Aug. 21, 2015, when China's surprise devaluation of the yuan roiled markets. Prior to this recent market tumult, extreme enthusiasm for U.S. equities had propelled the fund's total assets above $300 billion.

Flow activity in similar S&P 500 exchange-traded funds offered by BlackRock and Vanguard was much more muted last week. The iShares Core S&P 500 ETF (IVV) actually took in $634.5 million, while the Vanguard S&P 500 ETF (VOO) saw only a modest $209 million exit the fund. (More: Special Report: 2018 Inside ETFs)

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Why some retirement plan advisers think Fidelity is invading their turf

InvestmentNews editor Frederick P. Gabriel Jr. and reporter Greg Iacurci talk about this week's cover story that looks at whether Fidelity Investments is stepping on the toes of retirement plan advisers.

Latest news & opinion

Cetera reportedly exploring $1.5 billion sale

The company confirmed it's talking to investment bankers to 'explore how to best optimize [its] capital structure at lower costs.'

SEC Chairman Jay Clayton outlines goals for a new fiduciary standard

Rule should provide clarity on role of adviser, enhanced investor protection and regulatory coordination.

Advisers bemoan LPL's technology platform change

Those in a private LinkedIn chat room were sounding off about fears the independent broker-dealer will require a move to ClientWorks before it is fully ready.

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print