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Tech stocks, including Apple, were safety trade during Covid, but this market is different
Tech stocks, including Apple, were safety trade during Covid, but this market is different

CNBC

time23-06-2025

  • Business
  • CNBC

Tech stocks, including Apple, were safety trade during Covid, but this market is different

Tech stocks have acted like a stock market safe haven at various times in recent years when volatility went up, such as during the Covid pandemic. But a recent slide in the tech stock often considered to be the safest of all, Apple, has raised questions about that role for the market's leading sector. As of last week, Apple was a notable underperformer, down -0.6% over the past two months (approximately 40 trading sessions), according to CNBC research. But that doesn't mean tech hasn't bounced back strongly from the early 2025 tariff-triggered selloff. The SPDR Info Tech Sector Fund (XLK) is up 25% over that period, while the Invesco Nasdaq Trust (QQQ) has produced a similar rally. It's Apple that's no longer acting like the stock that in recent years had seemed to function as the equities market's closest thing to a bond. The recent gap is Apple's worst relative performance to its own sector fund since December 2002, according to CNBC research. It's the only of the so-called "Magnificent 7" tech stocks to recently trade below both its 50- and 200-day moving averages. How are investors playing tech in an up-and-down year for the market? Buying the broad stock market on the dips has worked, and is an inherent bet on tech. Investors have a hefty weighting to tech in S&P 500 index funds and ETFs this year, where the top tech stocks represent over 30% of the index. Amid the recent tariff volatility, the Vanguard S&P 500 ETF (VOO) has bested all other funds in new flows from investors, and in fact, it's on pace to break the record for annual net inflows, a mark it just set last year. It's currently sitting at $82 billion in net inflows in 2025, more than four times as much as the next biggest haul for equity ETFs, the Vanguard Total Stock Market Fund (VTI). Both the Invesco Nasdaq 100 ETF (QQQM) and the Invesco QQQ Trust make the top 10 among all ETFs, with roughly $9 billion and $8 billion in inflows, respectively. The Vanguard Information Technology ETF (VGT) has taken in close to $3 billion. VettaFi director of research Todd Rosenbluth said the broadest bets on a resilient U.S. stock market are also the biggest bets on tech. "I think many people are having tech and AI as part of a broader portfolio, as opposed to leaning in solely onto the technology sector," he said on a recent CNBC "ETF Edge." And he added that investors are for the most part using traditional approaches to hedging stock market risk, with strong interest in fixed income ETFs, especially the shortest-term bonds and notes where they can "earn some income, and not take on much risk," he said. Rosenbluth said it is true that during Covid the tech sector had been seen as a relative safe haven for investors. But in 2020, there was also the sudden surge in reliance on technology for those who were working or attending school remotely, leading to a unique tech sector boom. The tech sector went through a significant downturn in 2022, but it has remained a fairly reliable grower, he said, with the emergence of AI and rise of the chip sector led by Nvidia. "Large-cap tech is a relative safe haven, but we're seeing investors want the benefit of diversification with more traditional defensive sectors," Rosenbluth said. That includes utilities and consumer staples, which have both outperformed the S&P 500 this year, though not by nearly as sizable a margin as tech has. For others who follow tech stocks, any market volatility remains a buying opportunity. Wedbush Securities global head of technology research Dan Ives said on "ETF Edge" that times of geopolitical strife are no different. And he said concerns about the valuation of the sector compared to other sectors have cost investors if that kept them out of tech stocks in recent years. "My view of tech, if you focus just on valuation, you missed every transformational tech stock of the last 20 years. And I believe the market is still massively underestimating what the growth is going to look like for the AI revolution" said Ives, whose firm recently launched an AI ETF branded with his name. "That's why any type of geopolitical events, we always view as opportunities to own these names cheaper, that's kind of always been our view the last 25 years we have covered tech." One investor approach of note this year is certain, Rosenbluth said, regardless of how any single investor approaches tech stocks. "In 2025, investors are getting used to a more volatile time period than they were even a month, or three months ago, more accepting of volatility," he said. Disclaimer

Why 'defensive' investment plays will see an uptick soon
Why 'defensive' investment plays will see an uptick soon

Yahoo

time13-06-2025

  • Business
  • Yahoo

Why 'defensive' investment plays will see an uptick soon

US stocks (^GSPC, ^IXIC, ^DJI) saw nearly $10 billion in outflows this week, according to data from Bank of America, as traders reacted to rising volatility. Todd Rosenbluth, TMX VettaFi head of research, joins Catalysts to explain the investment play rotation of bond exchange-traded funds (ETFs), gold (GC=F), and defensive energy plays. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. US stocks saw their biggest weekly outflows in almost three months with $9.8 billion pouring out of equities in the week ending June 11th, according to Bank of America data. Given this recent sentiment, we want to know how traders are positioning amid the volatility that we're seeing heading into the weekend. For that, I want to bring in my guest contributor for the hour, Todd Rosenbluth, who is the TMX Vetyfy head of research. Todd, good to have you here with us today. Great to be with you. Let's dive into this. Just talk about some of the flows data that you're seeing right now and what that spells out about the mindset of investors, even as we had seen the S&P 500 get to its highest closing level since February just yesterday. Right. So the most recent flows data that we've seen has been a pickup in demand for fixed income ETFs. So, core bond ETFs like BND or AGG, those are a couple of those, uh, widely held products. We've seen short-term government bond products gain traction, even gold, uh, saw some recent inflows with GLD. But I would note, we are on pace to have a trillion dollars of net inflows into ETFs again. We're we're closing in on 500 mark, which is tremendous at the halfway mark. Unlike last year where we crossed a trillion dollars, this has been a much more volatile time period for the equity market and the fixed income market. So it's great to see investors, even though they pulled back a bit in terms of the equity flows that you noted earlier, there's still overall demand for ETFs. It's more of a rotation than a moving money to the sidelines. On the whole, what is the typical flows activity that we tend to see, especially when there is overnight development and conflict in the Middle East, the most recent consideration that investors also have to look across their portfolio, look across their watch list and really assess where they might need to rotate, at least in an interim period of time? So, given the strong rally that we saw and then the news that came out about what's going on in Israel and the Middle East, it's more likely that we're going to see a rotation today and perhaps into early next week into the more defensive ways of investing. That's fixed income, short-term fixed income, gold, and even the more defensive equity, uh, investment styles. The higher quality, the more stable free cash flow, and we're likely to see energy products, uh, gain demand. AMLP is one of those more defensive energy products. It's the Alerian MLP ETF. We're likely to see as investors are rediscovering energy, given the rally and its defensive characteristics. That's an ETF we have our eye on. P Sign in to access your portfolio

Investors pile into ETFs at record pace despite market turmoil
Investors pile into ETFs at record pace despite market turmoil

Mint

time26-05-2025

  • Business
  • Mint

Investors pile into ETFs at record pace despite market turmoil

This year's volatile, trade war-obsessed market didn't shake American investors' fondness for exchange-traded funds. In fact, it only made them love them more. Investors have plowed a record $437 billion into U.S. ETFs so far this year, unfazed by the wildest markets since Covid. And if inflows maintain the current pace—historically, they accelerate in the summer and fall months—it will mark the second straight record year for U.S. ETF flows. That is happening in part because of the relentless flow of money out of mutual funds and into ETFs, which tend to offer lower fees and certain tax advantages that their older cousins can't match. But the decadelong trend doesn't fully explain this year's surge; indeed, when U.S. markets turned choppy, many began to double down on their bets on U.S. assets. And, now more than ever, they placed those wagers by buying ETFs. 'Investors are seeing selloffs as buying opportunities," said Todd Rosenbluth, head of research at data provider VettaFi. The hundreds of billions of dollars that investors poured into ETFs found their way into every major fund category: Stock funds and bond funds. Funds that track popular indexes continue to sell well, but so have those managed by professional stock and bond pickers, a relatively new corner of the ETF market that has gained momentum. No one fund benefited more from the surge than the ETF industry's new champ: Vanguard Group's S&P 500 ETF. The ultracheap index fund has soaked up a stunning $65 billion in net inflows this year, along the way becoming the world's biggest ETF by assets. Known by ticker symbol VOO, the fund more than doubled the previous annual ETF inflow record when it took in $116 billion last year. Now it is on pace to reset that mark again by October. VOO's rise illustrates how investors more broadly turned to ETFs this year. When stock-market volatility soared to a five-year high in April, Vanguard's S&P 500 fund reported its highest monthly inflows ever. Many investors had built up large cash holdings by then, and had been waiting for the right moment to shift money back into stocks, according to Greg Davis, president and chief investment officer at Vanguard. 'During that period of tumult in early April, we saw a 5-to-1 buy-to-sell ratio," Davis said. 'Investors have a tremendous amount of cash sitting on the sidelines and they know that if things are on sale, it is time to put money to work." Swelling ETF assets have been a windfall for Vanguard and BlackRock, the two largest U.S. fund managers. BlackRock Chief Executive Larry Fink has talked repeatedly about the opportunity for his firm to capitalize on a reallocation from cash to stock and bond funds. 'In the United States, there's $11 trillion sitting in money-market funds," Fink said at the Saudi-U. S. investment forum in Riyadh earlier this month. 'When there is uncertainty, you're going to keep more money in cash and that is what we witnessed." Several years after the Federal Reserve began lifting interest rates to combat inflation, the allure of cash is still strong for many investors. The second-most popular ETF this year has been a BlackRock 0-3 month Treasury bond fund, which has almost $17 billion in inflows. The cashlike fund has a 12-month trailing yield of 4.7%. A similar offering from State Street is also in the top 10 of the flows leaderboard. 'We are seeing some defensiveness on the fixed-income side," said VettaFi's Rosenbluth. 'With several short-term Treasury products in the top 10, that's a sign investors are happy being paid to wait." Still, equity funds have taken in a majority of this year's flows. Joining VOO in the top 10 are State Street's S&P 500 fund, Vanguard's total stock-market and equity growth funds, and two Nasdaq-100 funds from Invesco. An actively managed equity fund from JPMorgan that aims to reduce volatility and produce above-average dividend income through an options strategy also cracked the top 10. Part of a broader class of active funds that some analysts have dubbed 'boomer candy" thanks to their popularity with retirees, the JPMorgan fund is building on a breakout 2024. Actively managed funds continue to capture an outsize share of new assets. According to Trackinsight, 30% of this year's ETF flows have gone to active funds even though they make up less than 10% of the industry's total assets. Longtime mutual-fund giant Fidelity has been focusing on active ETF launches in recent years, and interest continues to grow, said Greg Friedman, Fidelity's head of ETF management and strategy. 'For the last 12 to 24 months, we've been seeing a very nice level of inflows with most of it on the active side," Friedman said. 'That has held up even during extreme volatility." For years, investors have been swapping their mutual funds for the tax benefits and liquidity offered by ETFs, boosting inflows. That trend could soon accelerate even further. Dozens of fund managers have filed applications with the Securities and Exchange Commission to offer new ETF share classes of existing mutual funds, which would allow them to offer popular strategies in the ETF wrapper without starting from scratch. SEC Commissioner Mark Uyeda said earlier this year he has told the agency's staff to give priority to the issue, and many in the industry are expecting approval as soon as this year. Write to Jack Pitcher at

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