In March, the US stock market continued to perform strongly, with exchange traded funds (ETFs) continuing to be favored by investors, with large inflows of funds and net outflows of technology ETFs.
Data shows that in March, global investors invested $126.5 billion in ETF products in the US market, the third highest monthly inflow since 2021, second only to the last two months of 2023.
In this round of buying frenzy, stock ETFs took over $96.6 billion, indicating that investors still have a relatively positive attitude towards US stocks.
In terms of sub themes, industrial sector stock ETFs are the most popular, with a net inflow of 1.4 billion US dollars, which is the strongest performance of industrial sector stock ETFs since July 2023; The raw materials and energy industry ETFs followed closely with net inflows of $1.3 billion and $600 million respectively, both of which are industries with strong cyclicality and high dependence on economic performance.
The fund movement in March sent an important signal, with technology ETFs experiencing a net outflow of $600 million, the first net outflow since June last year, and the first time since October last year that the inflow level of funds was lower than the overall market.
Surprisingly, healthcare ETFs with defensive properties were also not favored by funds, resulting in a net outflow of $700 million.
Regarding this, Cooper, senior macro strategist at iShares in Europe, the Middle East, and Africa at BlackRock, explained that although the US economy remains strong, facing the challenge of rising interest rates, market sentiment is gradually changing, shifting from defensive purchases in the past few months to increasing investment in cyclical industries. Technology ETFs have attracted a large amount of funds in the past year, and their positions have become relatively saturated.
The data from research firm VettaFi provides a basis for this change: the selected SPDR fund for the industrial industry attracted $829 million in inflows in March, while the selected SPDR fund for the materials industry and the selected SPDR fund for the energy industry attracted $574 million and $494 million respectively, both reversing the trend of fund outflows over the past year.
However, the selected SPDR fund in the healthcare industry experienced a net outflow of $150 million during the same period.
VettaFi Investment Director Rosen Bruce pointed out that from the data, it can be seen that market interest is currently shifting from the technology sector to other sectors. A considerable number of investors believe that the risks in technology stocks are constantly accumulating, and they are giving up on pursuing the seven major technology stocks that once led the rise.
However, Wall Street analysts emphasize that this market shift related to economic cycles is logical, especially as the US stock market continues to perform strongly in the first quarter, a shift towards moderate caution is necessary.