Large-Cap ETFs Point To “Sell In May” Sell-Off

While April was extremely strong for equities, May 1 started off poorly in a risk-off move. The fund flow data this week of the top ETFs by AUM show that trend. “Sell in May and Go Away” is something we will likely be hearing for the next few weeks, it will be interesting to see if the flows will follow that mantra, or if 2020 can buck the trend. It will be an interesting month with plenty of shockingly poor economic numbers set to come out after a full month of stay-at-home orders in April.

The largest ETF by EUM, the SPDR S&P 500 ETF Trust (SPY) lost some more ground this week. It had over $3.2 billion in outflows, bringing its 30-day total losses to $6.7 billion. For a holding with an AUM of a still impressive $252 billion, it might not seem like a huge deal, but there is a trend to cheaper ETFs right now. SPY’s net expense ratio of 0.094% while still cheap, is higher than their direct competitors.

The Vanguard S&P 500 ETF (VOO) also went risk off this week and lost some ground, losing $1.76 billion in net assets. After an impressive rally since March 23, it looks like investors are taking their winnings off the table. It has still gained $13.7 billion in the last 90-days, which likely reflects its net expense ratio of 0.03%.

The other stock-based ETFs that lost some flows this week were the iShares Core S&P 500 ETF (IVV), the iShares Core MSCI EAFE ETF (IEFA), and the Vanguard FTSE Developed Markets ETF (VEA). They lost $746 million, $449 million, and $159 million in flows this week, respectively. When stock markets like the S&P 500 rally 26.5% off their recent lows on March 23, it is not unusual to see investors look for safe havens.

It was not entirely a loss for stock-based funds in the top AUM category, however. The Invesco QQQ Trust (QQQ) gained $1.4 billion of inflows this week, as the returns turned positive on the year. After some notable technology companies reported earnings last week, there was likely more interest among the companies inside of QQQ. It has also amassed just under $9.6 billion in the last 90-days, impressively.

A look at where the rest of the inflows were for the week tells you how investors are eyeing up the market, and possibly repositioning for the “Sell in May” phenomenon. SPDR Gold Shares (GLD) amassed almost $1.1 billion in the last week, bringing their 90-day total to $8.7 billion.

As investors looked to safe haven assets, iShares Core U.S. Aggregate Bond ETF (AGG) and Vanguard Total Bond Market ETF (BND) also gained assets of $456 million and just under $306 million, respectively. This is despite rock-bottom interest rates across the board, with the Federal Reserve maintaining 0% interest rates on Wednesday and implying no hikes in the medium-term.

It will be interesting to see if this trend continues next week, especially after some potentially massive monthly re-balancing among pension-type assets.

Source: ETFG

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