The month of April was all about coronavirus-led global lockdowns, massive Fed and government stimulus in the United States, unprecedented policy easing in various parts of the globe, the biggest OPEC+ output cut deal, enormous crash in the WTI crude due to storage crisis and Wall Street’s fast recovery after slipping into a bear market in mid-March (read: Top ETF Stories of First Quarter).
Relentless research on treatments and vaccines and talks of the U.S. economy reopening following the improvement in virus cases have boosted the broader market. Moderate corporate earnings have also led to the market strength.
The S&P 500, the Dow Jones and the Nasdaq Composite added about 18.9%, 17.6% and 21%, respectively, past month (as of Apr 29, 2020). In this scenario, we highlight ETF asset flows for the month of April (per etf.com).
Gold Tops the List
Gold bullion ETF SPDR Gold Trust (P:GLD) GLD has seen inflows of $4.83 billion in the month. While a safe-haven rally amid the coronavirus fear increased the lure for gold, moderate strength in the greenback thanks to Fed policy easing helped the yellow metal rally even more. The bullion gained more than 6% in April.
Investment-Grade Corporate Bond ETF in High Favor
After its crisis-era policy launch, the Fed announced a fresh set of stimuli on Mar 23. The Fed added that the purchases of Treasury and mortgage securities are unlimited. Among other steps, the Fed confirmed it would buy investment-grade corporate bond ETFs for the first time. However, the Fed cannot own more than 20% of any one ETF or 10% of individual corporate bonds.
The very announcement led iShares iBoxx USD Investment Grade Corporate Bond ETF LQD to haul in about $4.26 billion in assets, after raking in about $5.18 billion in Q1 (read: All-Out Fed Support: Buy Highly-Rated Corporate Bond ETFs).
Virus Helps Healthcare (NYSE:HTA)
Healthcare stocks and ETFs were in investors’ favor amid the ongoing medical emergency. Large pharma and biotech companies are working on medicines, vaccines and testing kits. Most recently, Gilead GILD indicated that the trial for coronavirus treatment Remdesivir has met its initial goal. Health Care Select Sector SPDR Fund XLV fetched about $3.8 billion in assets in the month.
WTI Crude ETF Gain From Its Shift to Futures
Due to low demand, ample supplies and drying storage capacity, May WTI crude contract fell to the negative territory on Apr 20, for the first time in history, and the June contract too suffered lately. But the demand scenario is more bullish for later months thanks to the gradual reopening of economies. This took the oil market in contango, which means futures contracts are trading at a premium to the spot price.
WTI crude ETF United States Oil Fund (NYSE:USO), LP USO, which was originally designed to track the spot price of WTI crude oil, changed its structure repeatedly to counter the fast slide in oil prices. The fund started betting in favor of longer-term contracts since last week.
On Apr 27, USCF, the fund’s administrator, said that over the next three days, the USO will sell all of its West Texas Intermediate contracts for June delivery, in favor of longer-term contracts. Such restructuring helped USO gain about $3.76 billion in assets in the month(read: Oil in Great Contango: Here's How to Play With Crude ETFs).
High-Yield Adds Assets Too
In mid-April, the Fed said it would expand its bond-buying program to include debt that was investment-grade rated as of Mar 22 but was later downgraded to no lower than BB-, or three levels into high yield. The very move made iShares iBoxx USD High Yield Corporate Bond ETF HYG more appealing and it added about $2.78 billion in assets in the month (read: Fed Goes the Extra Mile: 6 ETF Areas to Win).
ESG ETFs Appear Virus Proof
ESG ETFs appeared somewhat resilient to the acute coronavirus selloff in Q1. At the end of March, which was the worst month for Wall Street since October 2008, total assets of ESG ETFs were $19.1 billion, down from the peak of $20.8 billion in February but still higher than any point in 2019, noted Bloomberg. The winning trend continued in April too with iShares ESG MSCI (NYSE:MSCI) U.S.A. ETF ESGU attracting about $2.53 billion (read: ESG ETFs Appear Unscathed by the Coronavirus Carnage).
S&P 500 Loses, But QQQ Gains
Both SPDR S&P 500 ETF Trust (ASX:SPY) SPY and Vanguard S&P 500 ETF VOO lost about $2.38 billion and $1.43 billion in assets, respectively. Meanwhile, Invesco (NYSE:IVZ) QQQ Trust QQQ raked in about $3.40 billion in assets, which showed investors’ interest in the tech-heavy Nasdaq (NASDAQ:NDAQ).
Emerging Markets Fell Out of Investors’ Favor
iShares Core MSCI Emerging Markets ETF IEMG shed about $2.44 billion in assets in April as the space is struggling with coronavirus-led full or partial lockdowns and economic crisis.
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Gilead Sciences, Inc. (NASDAQ:GILD): Free Stock Analysis Report
SPDR Gold Shares (NYSE:GLD): ETF Research Reports
SPDR S&P 500 ETF (NYSE:SPY): ETF Research Reports
Invesco QQQ (QQQ): ETF Research Reports
iShares iBoxx $ High Yield Corporate Bond ETF (HYG): ETF Research Reports
United States Oil ETF (USO): ETF Research Reports
Health Care Select Sector SPDR ETF (NYSE:XLV): ETF Research Reports
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD): ETF Research Reports
Vanguard S&P 500 ETF (VOO): ETF Research Reports
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
iShares ESG MSCI USA ETF (ESGU): ETF Research Reports
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