VettaFi’s head of ETF research, Todd Rosenbluth, joined Yahoo Finance Tuesday to talk about Q1’s ETF flows, as well as how investor sentiment data picked up at VettaFi helps explain the popularity of sectors like international equities and fixed income so far in 2023.
"Crypto has been a much stronger performer than gold this year," VettaFi Head of Research @ToddRosenbluth says. "It's a bounce back from the really poor performance we saw in 2022." pic.twitter.com/pWSv2fROfx
— Yahoo Finance (@YahooFinance) April 4, 2023
According to VettaFi data, ETFs added about $80 billion in the first quarter, with $52 billion of that going into fixed income ETFs, while international equities interest blossomed with around $30 billion for that category in Q1. That spike for international equities that started the year has seen a shift, as investor sentiment data gathered at VettaFi has shown, with investors coming back to U.S. equities somewhat.
“We’ve seen at VettaFi when we look at some of the data that's come out, we're seeing sentiment shift towards U.S. equities and away from international equities,” Rosenbluth said. “We're starting to see investors get a little more confidence in the U.S. equity exposure overall, they’re looking to rotate.”
Two ETFs that benefitted from Q1’s lean towards fixed income and international equities, Rosenbluth said, have been the WisdomTree Floating Rate Treasury ETF (USFR) and the JP Morgan BetaBuilders Europe ETF (BBEU). USFR tracks the Bloomberg U.S. Treasury Floating Rate Bond Index, investing in floating rate Treasuries (FRNs) with rates tied to the most recent 90-day T-bill auction. BBEU, meanwhile, offers low-cost exposure to Europe and developed names like Nestle (NESTLE).
“For investors that are concerned about the rising rate environment and looking for a flight to quality, you get 5% yield with this WisdomTree ETF,” Rosenbluth said. “And we're really starting to see investors see that as a safe haven where you can get stable income while you try to figure out what's next within the fixed income world.”
See more: “The ABCs of FRNs: Get Floating Rate Note Yields in USFR”
While VettaFi’s advisor and ETF flows data have underlined a flight to quality, commodity ETFs in general and gold ETFs, in particular, have been out of favor, with crypto stronger than gold over the first quarter. Gold would traditionally be expected to be a safe haven play itself in volatile times like 2023 has seen so far, yet crypto has outdone the precious metal.
“Crypto has been a much stronger performer than gold this year,” Rosenbluth explained. “I think it's a bounce back from the really poor performance that we saw in 2022… We've seen a renewed interest in crypto ETFs, the underlying ETF BITO, the ProShares Bitcoin Strategy ETF (BITO), but as well as the equity-related products that are tied to crypto. More than gold in particular, and that’s been a bit surprising in this environment.”
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