It’s the end of a wild first quarter for stock and bond investors, and ETF flows are reflecting that turmoil. The $7 trillion ETF business has become a barometer for investor sentiment. The good news: Despite big market swings , equity and bond ETFs still saw overall inflows in the first quarter. The bad news: The inflows are far smaller than in recent years, as some investors were parking enormous amounts of cash in other investments like money market funds toward the end of March. ETFs still getting money, but at a slower pace As of March 24, ETFs have taken in a combined $70 billion in 2023, according to Nate Geraci at the ETF Store. ETF flows year to date: $70 billion inflows Consisting of: Equity: $24 billion inflows Fixed Income: $43 billion inflows Other (currency, etc.): $3 billion inflows Source: ETF Store While that is still inflow, it is far less than has been typical in recent years. At this time last year, for example, there was nearly $200 billion in inflows by this time. 2023 ended with north of $600 billion in inflows. Equity inflows in particular saw a dramatic split: There were $3 billion in outflows from U.S. equity funds, and $27 billion in inflows into international funds. One likely explanation, Geraci tells me, is that investors spooked by the dual drop in stocks and bonds in 2022 have become far more cautious. “On the equity side, I think the low flows reflects uncertainty in the marketplace, particularly fears of a recession on the horizon,” he said. Much of that uncertainty can be seen in a notable pickup in money going into money market funds, traditionally a safe haven asset. Flows have increased this year, but particularly in March as the banking crisis has heated up. According to Refinitiv Lipper, investors poured $108 billion into money market mutual funds during the week ended March 15., its fifth-largest net inflows on record dating back to 1992. Q1 big winners: Treasurys and international My mother is ahead of the pack. I was…
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