Investors Continue To Dump Small Cap Funds At An Alarming Rate

Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today points out continued inflows into the SPY, but perhaps a disturbing ongoing trend in a flight away from small caps.

ETF/Index options trading was unremarkable yesterday, but this is not that surprising, given we are all coming back from an extended holiday weekend. SPY (SPDR S&P 500), as we mentioned yesterday, has led all ETPs in terms of net inflows lately. That fact is very interesting, given it continues to hit new all-time highs unabated, with more than $3.3 billion net entering the fund in the past couple sessions.

In related activity, competing S&P 500 ETF IVV (iShares Core S&P 500) has also pulled in new assets lately to the tune of over $650 million.

On the flipside, however, and something that we have also mentioned in past pieces, Small Caps have seen some bloodletting into the new highs. Specifically, IWM (iShares Russell 2000) has seen more than $900 million flow out lately, as investors are seemingly less willing to bet on more small cap upside.

In another perplexing development, Dow Jones Industrial Average tracker DIA (SPDR DJIA) has seen a substantial more than $2 billion vacate recently via redemption flows.

What these flows are indicative of is anyone’s guess at this point, but they’re certainly worth monitoring as we progress through the end of winter and into the spring months.

The iShares Russell 2000 Index ETF (NYSE:IWM) was trading at $139.57 per share on Wednesday morning, down $0.63 (-0.45%). Year-to-date, IWM has gained 3.50%, versus a 5.65% rise in the benchmark S&P 500 index during the same period.

IWM currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 28 ETFs in the Small Cap Blend ETFs category.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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