Do-It-Yourself (DIY) Investor: Where Are Investors Putting Their Money?

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Thursday, July 5, 2012

Where Are Investors Putting Their Money?

Tracking investment flows is a popular pastime on Wall Street. It is a way to get a sense of market thinking. Exchange traded fund (ETFs) flows for June, as reported by the ETF Industry Association, showed the biggest inflows, as follows:

ETF	INFLOW	MARKET SECTOR	RETURN (%)
SPY	$3.6 bln.	S&P 500	7.66
QQQ	$1.4 bln.	NASDAQ	7.65
LQD	$1.3 bln.	INV. GRADE CORP. BONDS	1.3

Biggest outflows:

ETF	OUTFLOW	MARKET SECTOR	RETURN (%)
VB	$.965 bln.	SMALL CAP STOCKS	10.42
SHY	$.65 bln.	1-3 YR. TREAS. NOTES	-0.08
FXI	$.568 bln.	CHINA	4.27

*Returns are from Morningstar and are based on fund net asset asset value for the 30-day period ended 7/3/2012.

During the month, the Federal Open Market Committee announced a continuation of "operation twist" whereby they focus on investing in the longer maturity portion of the yield curve in lieu of shorter maturities. It appears that this was impetus for investors to seek higher-yielding corporate bonds in this part of the curve.

For additional detail, see the Bond ETFs Remain Top Draw in June by Tom Lydon.