Investors Rotate Into Bonds And Gold After A Historic Month For Stocks

Investors Rotate Into Bonds And Gold After A Historic Month For Stocks

As the rally in stocks continued, albeit with last week providing plenty of volatility, ETF fund flows had some big surprises. Or, maybe not, given that the week was filled with a flurry of corporate earnings, a Federal Reserve meeting, and a month-end of April that had exceptional returns.

The biggest inflow of the week belonged to the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), with almost $1.6 billion in new assets gathered.

Given that the Federal Reserve pledged to keep rates at or near zero until full employment and inflation return, it makes sense that investors flocked to higher yielding bonds.

With less risk of interest rate hikes soon, and inflation dropping, there is a good chance that HYG remains attractive for the foreseeable future.

This was combined with more bond funds that received massive inflows last week, with the iShares 20+ Year Treasury Bond ETF (TLT), the SPDR Bloomberg Barclays High Yield Bond ETF (JNK), the iShares Core U.S.

Aggregate Bond ETF (AGG) and the iShares 7-10 Year Treasury Bond ETF (IEF) all among the top names receiving inflows last week. They gained $1.1 billion, $834 million, $456 million, and $451 million, respectively as investors (and the Fed) added liquidity to the bond market.

A massive inflow also went into the Invesco QQQ Trust (QQQ) this week, as investors added over $1.4 billion to the holding.

Given that Microsoft Corp MSFT, Apple Inc AAPL, Amazon.com Inc, Alphabet Inc, and Facebook Inc all reported last week among others inside the top 10 holdings of QQQ, it makes sense there was a large inflow to try and take advantage pre- and post-earnings release.

We also saw some decent flows into the shiny metals, with the SPDR Gold Shares (GLD) gaining just under $1.1 billion in the last week. It has been a steady gainer this year in assets, with $5.35 billion inflows over the last month, and just over $8.7 billion inflows over the last 3 months.

Gold has done well this year, with GLD up 11.8%, as investors are looking for non-fiat type assets as central banks and governments expand their balance sheets and print currency to battle a recession.

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