April 2024: ETF Asset Flows and Market Trends on Wall Street

In April 2024, Wall Street experienced its worst month of the year as major indices such as the S&P 500, Dow Jones, and Nasdaq all saw significant losses. The S&P 500 lost 3.4%, the Dow Jones retreated 3.4%, and the Nasdaq was off by 3.8%. Rising rate worries were a key factor weighing on Wall Street during this time, with the U.S. economy facing pressure from high inflation and slowing growth. Additionally, rising geopolitical tensions indicated that inflation would likely remain hot in the near term.

One of the key indicators of inflation, the “core” Personal Consumption Expenditures (PCE) index, which excludes volatile food and energy sectors, rose 3.7% year over year in the first quarter. This exceeded estimates of 3.4% and marked a significant increase from the 2% gain in the previous quarter. As a result, the Federal Reserve’s rhetoric turned hawkish, with Fed Chair Jerome Powell indicating that the central bank was in no rush to reduce borrowing costs due to persistent inflation.

Despite the challenging market conditions, investors continued to pour money into U.S.-listed ETFs in April. A total of $31.2 billion was injected into these ETFs, although this marked a decrease from the exceptionally high inflows seen in March. The new money helped to maintain momentum and pushed year-to-date inflows to $227.6 billion, surpassing the total inflow from the previous year.

Several ETFs stood out in terms of asset flows in April. The Vanguard 500 Index Fund (VOO), Vanguard Total Stock Market ETF (VTI), and Invesco S&P 500 Equal Weight ETF (RSP) were among the top performers, attracting $7.7 billion, $2.62 billion, and $2.23 billion in assets, respectively. However, the SPDR S&P 500 ETF Trust (SPY) witnessed outflows of $15.55 billion.

In the bond market, the iShares Core U.S. Aggregate Bond ETF (AGG) added about $3.21 billion in assets. This ETF tracks the Bloomberg US Aggregate Bond Index, which measures the investment-grade, U.S.-dollar-denominated, fixed-rate taxable bond market. Despite the challenging market conditions, the fund charges only 3 bps in fees and yields 3.46% annually.

In the cryptocurrency space, the iShares Bitcoin Trust (IBIT) amassed about $1.62 billion in assets, despite a slump in the price of bitcoin. The streak of 71 consecutive days of inflows into IBIT ended in April, but the ETF is poised to become the largest spot bitcoin ETF soon. On the other hand, the Grayscale Bitcoin Trust ETF (GBTC) lost assets worth $2.52 billion.

Overall, the ETF market saw a mix of inflows and outflows in April, reflecting the volatile and uncertain market conditions. Investors continued to seek opportunities in various sectors, with some ETFs proving to be more resilient than others in the face of rising rates and inflation concerns.