The U.S. ETF market surpasses $ 5 trillion in internet value as traders plunge into shares on vaccination hopes

The Wall Street Bull (The Charging Bull) can be seen during the Covid-19 pandemic in New York on May 26, 2020.

Tayfun Coskun | Anadolu Agency via Getty Images

Money flows into stocks through exchange-traded funds.

You can thank the potential vaccines. Money flows in because US investors who are reluctant to invest money in stocks are now piling up stocks, believing that “Covid Winter” 2020 will be followed by “reopening spring” 2021 and many are choosing ETFs as the this investment vehicle.

The exchange traded fund (ETF) industry in the US exceeded $ 5 trillion in assets under management last week, a new record. Record highs for stocks have been of great help, but over $ 400 billion in new money flowed into ETFs this year, only the second time it has exceeded $ 400 billion in a single year. By comparison, inflows totaled $ 246.6 billion at the same point in time last year, according to

Strong inflows into stocks in November

Inflows into pure vanilla stock ETFs such as the S&P 500 (SPY), Vanguard Total Stock Market (VTI) and Russell 2000 (IWM) were particularly strong this month.

Equity ETF Inflows (November)

  • SPDR S&P 500 (SPY) $ 15.1 billion
  • Vanguard Total Stock Market (VTI) $ 2.8 billion
  • iShares Russell 2000 (IWM) $ 1.6 billion


Investors believe earnings are too low for 2021

Revitalizing Strong Stock Inflows: The belief that earnings will remain strong for leaders like technology in 2021, but that beaten sectors like energy, banking and industrial will also see a rebound in 2021, pushing earnings to the level of 2019 brings back – and beyond. Earnings estimates for the S&P 500 are expected to decline 16% this year, but will rebound in 2021 to levels slightly above 2019 historical highs:

S&P 500 result

  • 2019: $ 163
  • 2020 (East): $ 137
  • 2021 (est.) $ 168

Source: Refinitive

Many – like Morgan Stanley’s Mike Wilson – believe these estimates are way too low as they have been through most of 2020.

“We have higher estimates for the next year,” he told CNBC’s Closing Bell. “We got about $ 175 on the S&P 500, we have a bull case of $ 183. I think we’re probably leaning towards this bull case because these vaccines are getting to market faster than that we might have expected, so $ 180 next year earnings power is a big number, “he said.

Outflows from bonds and gold

At the same time, there were outflows from government bond funds and gold ETFs.

Treasury / Gold Outflows (November)

  • iShares 20+ Treasury (TLT) $ 1.4 billion
  • SPDR Gold Trust (GLD) USD 1.4 billion
  • iShares 7-10 Year (IEF) $ 1.3 billion


“People are moving away from the safe haven sectors [bonds] and in stocks, “said Doug Yones, director of publicly traded products on the New York Stock Exchange.

Jan van Eck von, CEO of VanEck Associates, was even more energetic. He said that after years of investing money in bonds, bond investors may finally be looking for the exits: “The forty percent of your portfolio that is supposed to be in bonds is broken,” he told CNBC’s “ETF Edge” . “Nobody wants to own bonds with such low interest rates.”

Many may be fleeing pension funds, but it is a relatively recent phenomenon. Bonds have seen inflows for a number of years and have had healthy inflows throughout the year.

Inflows in 2020

  • Fixed Income $ 181.9 billion
  • Equity $ 167 billion
  • Gold $ 33 billion

Source: NYSE

ETFs keep winning

One thing is clear: ETFs are becoming the preferred way to move money in and out of markets. Mutual funds are still a $ 21 trillion business versus $ 5 trillion for ETFs, but there is no doubt that ETFs will hit $ 10 trillion in assets under management in the next few years.

“I think we could easily add another trillion or two [going into 2021]”Yones told me.

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