Plenty of investors may be out of office this summer, but ETFs aren’t on vacation. Despite ETFs frequently seeing Summer lulls, this year inflows are nearing a record pace. In fact, for some strategies, flows in July are contributing to a majority of their YTD flows. Taking a look around those ETFs can help get a sense of the trends entering the second half of the year.
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Intriguingly, the ETFs seeing the largest July flows relative to their YTD numbers largely invest in fixed income. Take the iShares Broad USD High Yield Corporate Bond ETF (USHY ). USHY has seen $3.85 billion in YTD inflows, with $2.7 billion arriving in July alone.
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD ), meanwhile, saw its July inflows of $2.3 billion lift its YTD flows out of the negative and into net inflows. A turnaround in flows for fixed income and corporate bonds in specific could owe to a changing perspective on rates and potential rate cuts.
Perhaps no strategy has benefitted from the rate cut outlook changing as much as the SPDR S&P 500 ETF Trust (SPY ). Before July, SPY was facing billions in net outflows YTD, and while it’s still down in flows YTD, a strong July with $14.6 billion for the month has helped the OG ETF recover some ground. Rate cuts becoming much more likely this Fall may have helped drive investors into the ETF.
“It has not been a quiet summer for ETF investors,” said VettaFi Head of Research Todd Rosenbluth. “With strong flows in July, we are on pace to challenge the all-time record for a calendar year set in 2021. Historically, the fourth quarter has been a strong period for ETFs by advisors and institutions.”
Flows, ETFs, and a Hot July
Among other equities strategies worth noting, the Invesco S&P 500 Equal Weight ETF (RSP ) also stood out in July. The fund saw $3.1 billion in flows, in the top ten for the month. That also now represents more than half of the ETF’s YTD flows. RSP’s equal weight approach, which could help limit concerns around tech, may have also benefitted from rate cut excitement in terms of attracting flows.
Of course, much of this flows movement may also have occurred following the end of the financial year 2024. Whatever the reasoning, flows picked up the pace in a normally relatively staid period of the year. ETFs are set to benefit – and perhaps set yet another record.
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