Wall Street has been recovering lately as fears of aggressive rate hikes abate. Positive jobs data but tepid wage growth reduced fears of frequent rate hikes by the Fed.
What’s Driving Inflows?
The U.S. economy added 313,000 jobs in February — the highest since July 2016 — compared with a Reuters forecast of 200,000. However, tepid wage growth reduced fears of the Fed going on a rate hike spree. Average hourly earnings in the United States grew a mere 0.1% in February compared with 0.3% in the previous month.
In February, the S&P 500 entered correction territory and lost more than 10% as strong wage growth in January made investors bet on aggressive rate hikes by the Fed. However, the recent weakness in wage growth has introduced some calm with respect to faster-than-expected rate hikes.
U.S. large-cap ETFs have been garnering record inflows in March as multiple factors are reducing investor worries. There is a slight relief as far as geopolitical risks are concerned. North Korea has expressed its intent to commence denuclearization talks in case security for its regime is guaranteed. Although there is still a lot of uncertainty surrounding this, the talks are a step in the right direction and President Trump has agreed to meet with his North Korean counterpart.
Moreover, March has witnessed massive outflows from high-risk assets as Trump sparked fears of a trade war by imposing a 25% tariff on steel imports and a 10% tariff on aluminum imports. Multiple nations have already declared potential retaliatory measures. Although equities, as a whole, had to bear the brunt of Trump’s protectionist policy, large-cap ETFs exhibit low volatility and are thus less prone to huge market swings.
Let us now discuss three ETFs, which witnessed massive inflows in March so far.
iShares Core S&P 500 ETF (IVV – Free Report)
This fund is a low-cost ETF that seeks to provide exposure to large established U.S. companies and tracks the S&P 500 Index. This fund amassed $956.0 million in inflows in the period Mar 1- Mar 12, per etf.com data.