Investors Dumping US Equities and Gong Abroad

A month after March set a five-year high for monthly inflows into overseas equity ETFs—at $22 billion—the April level of flows into overseas equities ETFs broke that record, with $25 billion in net flows into international equity ETFs.

The month-over-month record leapfrogging means the message is not new, but it’s a sign that instead of leveling off, the trend among investors bailing on U.S. equities for more international exposure has accelerated.

The $16 billion fear signal

Investors pulled a net $16 billion from U.S. equity ETFs in April, according to monthly data from FactSet. The list of the biggest ETF losers in April flows runs the gamut of U.S. equity buckets: small-cap, large-cap, financials, technology, real estate, health care, utilities. But the biggest flow loser of all was the proxy for the U.S. market—the SPDR S&P 500 ETF (SPY)—which saw negative $13 billion in flows.

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The only bright spots in April for U.S. stocks were mid-cap and energy, which were No. 5 and No. 6 in April flows among ETF asset classes—energy being no surprise with the big crude-oil price rally.

Stacey Brorup, of FactSet’s ETF research team, said the most notable positive turn for the U.S. was in the fixed-income market. March had seen net outflows of $900 million, while April saw inflows of around $3.56 billion. “That’s a big reversal in investor sentiment,” she said.

via CNBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza