Wall Street witnessed a decent March despite heightened volatility created by bank failures in the United States and Europe. Yet, the major indices ended the month in green. The S&P 500 and the Dow Jones climbed 3.5% and 1.9%, respectively, while the tech-heavy Nasdaq Composite Index outperformed, gaining 6.7% (read: 5 Leveraged or Inverse ETFs That Gained Over 25% in March).
This is especially true given technology stocks took flight on expectations over less-hawkish monetary policy. The banking turmoil started earlier last month with the collapse of two regional U.S. lenders that had sparked concerns about a broader financial crisis and led to a dramatic shift in monetary policy expectations from the Fed.
Traders' bets are now almost equally split between a pause and a 25-bps rate hike by the Fed in May, according to CME Group's Fedwatch tool. As rates dived, the growth sectors like technology surged. Against this backdrop, below we highlight a few ETFs that fetched sizable assets in the month of March and also the ones that lost considerable assets.
U.S. Treasuries Win
As bond yields fell in the month on the flight-to-safety trade, U.S. treasury bonds gained in prices last month. The U.S. benchmark treasury yield started the month at 4.01%, hit a high of 4.08% and ended the month at 3.35%.
This has probably led investors to flock to this investing segment. iShares 7-10 Year Treasury Bond ETF IEF, SPDR Bloomberg 1-3 Month T-Bill ETF BIL, iShares U.S. Treasury Bond ETF GOVT, iShares 20+ Year Treasury Bond ETF TLT and iShares 0-3 Month Treasury Bond ETF SGOV and SPDR Portfolio Intermediate Term Treasury ETF SPTI amassed about $6.06 billion, $3.82 billion, $3.72 billion, $3.72 billion, $2.83 billion, $2.37 billion and $2.03 billion in assets, respectively.
Quality ETF Topped the List
Quality ETF iShares MSCI USA Quality Factor ETF QUAL hauled in about $7.28 billion in assets, securing the top spot in the winners’ list. Investors focused on high-quality investing in March due to the stock market volatility. Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility, elevated margins, and a track of stable or rising sales and earnings growth.
These products thus reduce volatility when compared to plain vanilla funds and hold up rather well during market swings. Further, academic research shows that high-quality companies consistently deliver superior risk-adjusted returns than the broader market over the long term (read: Quality ETFs to Buy for Market-Beating Returns Amid Turmoil).
Value ETF Lost Assets
SPDR Portfolio S&P 500 Value ETF SPYV lost about $1.52 billion in assets as rates dived in the month and favored growth investing over value investing. Value stocks perform better in a rising rate environment.
Momentum Stocks & Small-Caps Fell Out of Favor
iShares MSCI USA Momentum Factor ETF MTUM andiShares Russell 2000 ETF IWM lost about $1.58 billion and $1.14 billion in assets, respectively in the month. This happened due to the occasional market crashes in the month.
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Get it free >>iShares 20+ Year Treasury Bond ETF (TLT): ETF Research Reports
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares 7-10 Year Treasury Bond ETF (IEF): ETF Research Reports
iShares MSCI USA Quality Factor ETF (QUAL): ETF Research Reports
iShares MSCI USA Momentum Factor ETF (MTUM): ETF Research Reports
iShares U.S. Treasury Bond ETF (GOVT): ETF Research Reports
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL): ETF Research Reports
SPDR Portfolio S&P 500 Value ETF (SPYV): ETF Research Reports
SPDR Portfolio Intermediate Term Treasury ETF (SPTI): ETF Research Reports
iShares 0-3 Month Treasury Bond ETF (SGOV): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
