Investors are not abandoning safe haven plays that have worked in the stock market during the coronavirus pandemic, even as they make a long-awaited rotation into assets most likely to benefit from the economic recovery, according to a report on March fund flows.
The report, prepared by data provider Refinitiv Lipper for MarketWatch, shows that the category of multi-cap value funds picked up the most money in March, followed by emerging markets funds. Also among the categories with the biggest inflows: large-cap value funds and financial-services funds.
Still, S&P 500 Index funds were third on the list, and general U.S. Treasury funds 11th, just missing a spot in the top ten. “I think people are still concerned,” said Tom Roseen, head of research services for Refinitiv Lipper. “They’re looking at Treasurys for safety.”
| ETF CLASSIFICATION | INFLOWS |
| Multi-Cap Value Funds | $9.1 billion |
| Emerging Markets Funds | $8.5 billion |
| S&P 500 Index Funds | $6.5 billion |
| Multi-Cap Core Funds | $5.2 billion |
| Equity Income Funds | $5.2 billion |
| Large-Cap Value Funds | $4.9 billion |
| Financial Services Funds | $4.4 billion |
| Natural Resources Funds | $4.1 billion |
| Small-Cap Core Funds | $3.7 billion |
| Industrials Funds | $3.5 billion |
| Source: Refinitiv Lipper |
Utility funds had the best return, likely on the back of the massive power outages across much of the southern United States, followed by energy MLP funds and a swathe of value funds: small-cap, multi-cap and mid-cap.
But when the data is sorted by returns for individual funds, not just categories, an intriguing picture emerges. The best performers are funds involved with construction, manufacturing, or production – or the raw materials that go into those processes, as noted in the table below.
| ETF | One-month return |
|
Breakwave Dry Bulk Shipping ETF BDRY, +1.56% |
30.9% |
|
VanEck Vectors Steel ETF SLX, +2.38% |
14.9% |
|
Invesco S&P SmallCap Value with Momentum ETF XSVM, +1.16% |
13.9% |
|
SPDR S&P Homebuilders ETF XHB, +1.13% |
13.5% |
|
Pacer US Cash Cows 100 ETF COWZ, +1.05% |
13.2% |
|
iShares US Home Construction ETF ITB, +1.21% |
12.9% |
|
SPDR S&P Retail ETF XRT, +1.07% |
12.5% |
|
Invesco S&P SmallCap 600 Revenue ETF RWJ, +0.94% |
12% |
|
First Trust Utilities AlphaDEX Fund FXU, +0.94% |
11.8% |
|
Invesco S&P 500 Equal Weight Utilities ETF RYU, +1.17% |
11.6% |
| Source: Refinitiv Lipper |
Also returning double digit percentage gains: the SPDR S&P Metals & Mining ETF XME, the Aberdeen Standard Physical Palladium Shares ETF PALL, and more.
That’s a classic early-cycle phenomenon, Roseen said in an interview. “I’m surprised it didn’t take off earlier,” he said.
Roseen noted another takeaway about investor behavior in the data. “People aren’t chasing returns — they’re being forward-looking.” One example is the emerging-markets category, which picked up $8.5 billion, but saw flat returns.
