Investors jump into ETFs that took a beating in the latest sell-off

Funds that track areas like small-cap stocks and semiconductor manufacturers are seeing inflows

Oct 29, 2018 @ 4:11 pm

By Bloomberg News

Investors in exchange-traded funds are buying the dip.

Cash is pouring into ETFs tracking areas of the market that have been pummeled in the October sell-off, like small-cap stocks and semiconductor manufacturers. The iShares Russell 2000 ETF (IWM) saw inflows of more than $1.17 billion last week, and the VanEck Vectors Semiconductor ETF (SMH) took in $492 million.

"It looks like the trading crowd doing some dip-buying as a result of the recent drop," said Eric Balchunas, Bloomberg Intelligence analyst.

Investors also added around $2.8 billion to the iShares Core S&P 500 ETF (IVV), which along with the Russell 2000 fund saw the most inflows of all equity ETFs last week.

"Demand for small-cap funds is a good indicator of U.S. risk tolerance as these funds provide diversification to up-and-coming companies," said Todd Rosenbluth, director of ETF research at CFRA Research. "They are more exposed to a strong U.S. economy and less connected to overseas trends."

The inflows came during a highly volatile five days for the financial markets. The S&P 500 Index fell 3.9% for the week, leaving it more than 9% below its September peak, while the Nasdaq Composite Index dropped 3.8% and the Dow Jones Industrial Average retreated 3%.

One industry sector where ETF investors are looking for value is chipmakers, which have been beaten up badly lately. The VanEck Vectors Semiconductor ETF (SMH) is down more than 15% this month but just posted its best week of inflows since April.

"With the volatility, there's an opportunity to make a quick buck," Mr. Balchunas said. "There are some people excited about all this because, for a while, everything moved very steadily with no volatility. You can see the trader crowd running around trying all sorts of things."

(More: The market doesn't care about positive earnings)


What do you think?

View comments

Recommended next


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 It'll help us continue to serve you.

Yes, show me how to whitelist

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


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print