February ETF Asset Report: What's Hot, What's Not

Sanghamitra Saha
·5-min read

February was pretty volatile for Wall Street. Though the start of the month was upbeat, rising rate worries triggered a crash at month-end. Growing vaccine distribution and hopes of hefty stimulus under the Biden presidency along with a dovish Fed stoked inflationary pressure and boosted long-term treasury yields.

Still, the S&P 500 (up 2.61%), the Dow Jones (up 3.17%), the Nasdaq Composite (up 0.93%) and the small-cap Russell 2000 (up 6.14%) managed to remain in the green. The tech-heavy Nasdaq was the worst performer among the big three as the bunch of stocks that won during the pandemic-ridden 2020 on low rates and rising rates now are wreaking havoc on the segment.

U.S. benchmark Treasury yields started the month with 1.09% and it ended the month at 1.44%, having hit a high of 1.60% (the maximum in a year) in the final week of the month. Stocks logged a steep selloff in the last week of February. There has been a rout in the bond market too with selloff taking pace while value stocks and economic reopening-friendly stocks gained momentum.

In this scenario, we highlight ETF asset flows for the month of February (per etf.com).

S&P 500 in High Favor

The S&P 500 has attracted massive funds last month as optimism for sooner-than-expected normalcy rule the market. Vanguard S&P 500 ETF VOO, iShares Core S&P 500 ETF IVV and SPDR S&P 500 ETF Trust SPY amassed about $11.31 billion, $8.32 billion and $6.86 billion in assets, respectively, past month.

ARK Management ETFs in a Sweet Spot Despite Tesla's Selloffs

Ark Investment Management founder Cathie Wood has been dominating the headlines lately for seeing massive inflows into her ETF line-up. Its star product Ark Innovation ETF ARKK is up more than 100% in the past year.

However, ARK ETFs are heavily weighed on Tesla. So, Tesla’s gains helped ARK ETFs to register such monumental gains. While February’s growth stock selloffs weighed on Tesla, ARK ETFs too underperformed naturally.

But that did not undermined investors euphoria for ARK ETFs due to its long-term potential as ARKK added about $2.42 billion in assets. ARK Fintech Innovation ETF ARKF fetched about $1.71 billion in assets (read: Is ARK ETFs' Stellar Journey Over?).

Total Stock & Total Bond ETF Gain Too

There were risk-on sentiments globally in the month of February. Vanguard Total Stock Market ETF (VTI) attracted about $2.21 billion in assets. Though we saw bond market selloff in the month, Vanguard Total Bond Market ETF (BND) hauled in about $2.01 billion in assets. The decent yield in the fund, about 2.39% annually, probably have led to this interest. Moreover, the bond fund holds different duration funds, which offers a great diversification against the rising rate trend.

Financials Continues to Hog Attention  

As banks fare well in a steepening yield curve environment, the related ETFs have chances of gaining ahead. No wonder, Financial Select Sector SPDR Fund XLF raked in about $1.92 billion in assets in the month (read: Will March See a 'Taper-Tantrum'-Like Crisis? 6 ETF Plays).

Nasdaq Continues to Hog Attention

The tech-heavy Nasdaq-100 ETF Invesco QQQ Trust QQQ hauled in about $1.89 billion in assets in the month. Technology has been a winning sector amid the coronavirus outbreak as social distancing norms enacted globally to mitigate the spread of the virus compelled people to indulge in online shopping and work as well as learn from home. With the work-from-home trend still continuing, this Nasdaq ETF remained in a decent spot.

Junk Bonds Top Loser

iShares iBoxx USD Investment Grade Corporate Bond ETF LQD and SPDR Bloomberg Barclays High Yield Bond ETF JNK lost about $5.33 billion and $2.03 billion in assets in February. As treasury yields started shooting up, investors probably lost interest in junk bond ETFs.

Gold Lost Glitter Too

SPDR Gold Trust GLD lost about $3.83 billion in assets as rising risk-on sentiments went against this safe-haven fund. Rising rate worries are likely offer strength to the greenback, which is a negative for the commodity fund.

Long-term Treasuries Out of Favor

Rising interest rate hurt investors’ interest in treasury bond ETFsiShares 20+ Year Treasury Bond ETF TLT saw outflows of about $1.89 billion.

Dividend Aristocrats Too Saw Outflows

Dividend aristocrats, which normally act as safe investments, also recorded outflows in February. Since risk-on sentiments prevailed in the month, SPDR S&P Dividend ETF SDY lost about $1.80 billion.

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iShares 20 Year Treasury Bond ETF (TLT): ETF Research Reports
 
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
SPDR Bloomberg Barclays High Yield Bond ETF (JNK): ETF Research Reports
 
SPDR Gold Shares (GLD): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
iShares iBoxx Investment Grade Corporate Bond ETF (LQD): ETF Research Reports
 
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
SPDR S&P Dividend ETF (SDY): ETF Research Reports
 
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