Wall Street was downbeat in December with muted Santa Clause Rally. The S&P 500 was off 5.7%, the Dow Jones has lost 3.7%, the Nasdaq Composite has retreated about 8.7% and the Russell 2000 has fallen about 7% past month (as of Dec 30, 2022).
In fact, the month snapped two consecutive months of gains. While recession fears were triggered by the relentless market forecasts, rising COVID cases in China and the advent of a new sub-variant of Omicron Covid-19 virus also contributed to the market slump.
Against this backdrop, below we highlight a few ETFs that fetched sizable assets in December.
Both Stocks & Bonds Win
Vanguard Total Stock Market ETF VTI amassed about $2.344 billion in Assets in the month whileiShares Core U.S. Aggregate Bond ETF AGG andVanguard Total Bond Market ETF (BND) hauled in about $2.87 billion and $2.15 billion in assets, respectively in the month.
The benchmark U.S. treasury yield started the month at 3.53% while it ended the month at 3.88%. The yields seem pretty moderate given 4%+ yields recorded in 2022. As a result, both stocks and bonds probably have fetched investors’ attention.
Both Growth & Value ETFs Gain
iShares Russell 1000 Growth ETF IWF and Vanguard Value ETF VTV fetched about $ 1.78 billion and $1.45 billion in assets in December, respectively. While moderate rates and a likelihood of slower Fed rate hikes in 2023 favored growth ETFs, value ETFs too gained assets because a stubbornly-high-rate-environment still prevails.
S&P 500 & Nasdaq-100 Fall Out of Favor
SPDR S&P 500 ETF Trust SPY, iShares Core S&P 500 ETF IVV and Invesco QQQ Trust QQQ lost about $3.47 billion, $2.95 billion and $2.55 billion in assets, respectively.
TIPS ETFs Underperform Too
iShares TIPS Bond ETF TIP lost about $1.51 billion in assets. As inflation showed signs of easing, investors probably are not finding it a great bet right now. CPI jumped 7.1% year over year in November, down from a 7.7% year-over-year increase in October and a recent peak of 9.1% in June. This represents the lowest annual increase since late 2021. Vanguard Short-Term Inflation-Protected Securities ETF VTIP too lost about $845.6 million in assets.
Short-Term Bond ETFs Fall Out of Favor
The monetary policymakers forecast that their key short-term rate will reach 5% to 5.25% by the end of 2023 before being slashed to 4.1% in 2024. That suggests that the Fed is prepared to hike its benchmark rate by additional three-quarters of a point and then stay put until the end of 2023.
This has probably cut demand for short-term bond ETFs like iShares 1-3 Year Treasury Bond ETF SHY lost assets worth $1.12 billion. PIMCO Enhanced Short Maturity Active ETF MINT and Vanguard Short-Term Corporate Bond ETF (VCSH) saw about $843.4 million and $777.4 million in assets gushing out of the funds.
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Invesco QQQ (QQQ): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares TIPS Bond ETF (TIP): ETF Research Reports
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
Vanguard Value ETF (VTV): ETF Research Reports
iShares Core U.S. Aggregate Bond ETF (AGG): ETF Research Reports
iShares Russell 1000 Growth ETF (IWF): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
iShares 13 Year Treasury Bond ETF (SHY): ETF Research Reports
PIMCO Enhanced Short Maturity Active ETF (MINT): ETF Research Reports
Vanguard ShortTerm InflationProtected Securities ETF (VTIP): ETF Research Reports
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