Equity ETF Flows Send Bullish Signals

by: AdvisorShares

Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) shares recent fund flow trends.

U.S. Equity ETFs Give up $4.3 Billion, Send Mildly Bullish Signal. Leveraged Trades Also Look Bullish.

  • U.S. Equity ETFs gave up $4.3 billion in the week ended October 1, reversing a $3.4 billion inflow in the previous week. This week's outflows signal low demand for stocks, a bullish short-term indicator from a contrarian perspective.
  • Leveraged Long Equity ETFs gave up 0.5% of assets in the past week while Leveraged Short Equity ETFs added 0.9% of assets. Our studies find it's a contrarian bullish sign when Leveraged Equity ETF investors unwind long bets and add shorts because these traders typically are poor market timers.

Stock and Bond MFs and ETFs Take in $23.2 Billion in September.

  • Stock and bond ETFs and mutual funds finished September with a $23.2 billion net inflow, reversing a $42.9 billion outflow in August. Investors redeemed a net $11.7 billion from Bond Mutual Funds last month, adding to a $29.8 billion outflow in August. Bond ETFs took in $5.2 billion last month, reversing a $7.6 billion outflow in August.
  • U.S. Stock ETFs took in $13.5 billion last month, reversing a $15.3 billion outflow in August. Stock Mutual Funds gave up $8.5 billion last month, more than tripling a $2.3 billion outflow in August.

Investors Buy Corporate and Foreign Bond ETFs in Past 4 Weeks but Sell Municipal and Treasury Funds.

  • Corporate Bond ETFs took in $3.6 billion (6.1% of assets) in the past four weeks while Foreign Debt ETFs took in $158 million (1.0% of assets) in the same time frame. Investors sold an estimated $207 million (0.5% of assets) in Municipal Bond ETFs in the past four weeks and $130 million (0.1% of assets) in Treasury Bond ETFs.

Stock ETF Investors Buy Industrial, Sell Financial Funds in Past 4 Weeks. Growth ETFs Trump Value.

  • U.S. Stock ETF investors in the past four weeks bought an estimated $1.3 billion (9.9% of assets) in Industrials ETFs and $870 million (8.2% of assets) in Consumer Cyclical ETFs. Investors sold an estimated $506 million (2.0% of assets) in Financial ETFs and $196 million (2.4% of assets) in Consumer Defensive funds in the past four weeks. Growth-oriented Stock ETFs added a net $1.4 billion in the past four weeks while Value ETFs shed $679 million.

Spec Traders' Sentiment on EUR/USD and Nasdaq Hits 52-Week High. Traders Grow More Bullish on Oil and Gold but Less Bearish on 10-Year Treasuries and 2-Year Notes.

  • Speculative traders grew much more bullish on EUR/USD futures last week as the long-short ratio jumped to 2.1-to-1 as of September 24, up 38.7% from 1.5-to-1 the week before. Sentiment on EUR/USD futures has bounced strongly since July 19, when the short-long ratio closed at 1.8-to- 1.

  • Speculative traders' bullishness on tech stocks hovered at a 52-week high last week as the long-short ratio on Nasdaq futures stood at 5.8-to-1, unchanged from the week before. The Nasdaq futures long-short ratio is up 91.1% from an interim low of 3.0-to-1 on July 2.
  • Traders' bets on oil futures grew more bullish last week as the long-short ratio climbed to 3.9-to-1 from 3.7-to-1 the week before. The oil futures long-short ratio is down 6.0% from the y-t-d peak of 4.1-to-1 set on July 30.
  • Optimism on gold futures rose last week as spec traders pushed the long-short ratio to 2.8-to-1 on September 24 from 2.5-to-1 the week before. Bullish bets on gold are up 132% since hitting an 11-year low of 1.2-to-1 on July 9.
  • Spec traders became a bit less bearish on both ends of the Treasuries curve last week. Bets on 10-year U.S. Treasury futures produced a short-long ratio of 1.3-to-1 on September 24, down from 1.7-to-1 the week before. The short-long ratio on two-year U.S. Treasury futures, meanwhile, edged down to 1.1-to-1 last week from 1.3-to-1 the week before.

Hedge Fund Managers Grew Less Bearish on Stocks in September.

  • Hedge fund managers grew notably less bearish on U.S. stocks in the past month, according to the latest TrimTabs/Barclay Hedge Fund Sentiment Survey. Managers were substantially less bearish on U.S. Treasuries in September compared to August but a majority of them were neutral on the U.S. Dollar Index.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: AdvisorShares is an SEC registered RIA, which advises to actively managed exchange traded funds (Active ETFs). This article was written by Minyi Chen, CFA the portfolio manager of the AdvisorShares TrimTabs Float Shrink ETF (NYSEARCA:TTFS). We did not receive compensation for this article, and we have no business relationship with any company whose stock is mentioned in this article. This information should not be taken as a solicitation to buy or sell any securities, including AdvisorShares Active ETFs, this information is provided for educational purposes only.

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