What Do Recent Fund Flows to Financial ETFs Indicate?

(Continued from Prior Part)

Fund flows

The SPDR S&P Capital Markets ETF (KCE) (XLF) has lost $6.1 million in assets so far in 2016. In comparison, its outflows for 2015 were $45.3 million. During March, investors added $48 million to KCE.

KCE invests in a portfolio of asset management companies in the United States (SPY). Flows to the capital market space suffered due to steep stock market corrections early in 2016. However, most of these losses were offset in March as economic fundamentals in the United States showed signs of improvement and crude oil prices recovered. These factors led to a stock market rally in the United States.

Changes in institutional investors’ holdings

In 4Q15, trade activity by 13F filers displayed an 18.6% fall in aggregate shares held by institutional investors and hedge funds. Among the 21 13F filers holding the stock, ten funds reduced their exposures to KCE, while none sold all of their holdings in the ETF. In contrast, three funds created new positions, and seven funds increased their exposures to KCE.

Major institutional asset management companies such as Susquehanna International, Bank of America, Main Capital, Royal Bank of Canada (RY), and American International Group (AIG) were the top buyers of KCE during the fourth quarter. Institutions such as Clal Insurance, Credit Suisse (CS), Jane Street, and Citadel Advisors were the top sellers of KCE.

Browse this series on Market Realist:

• Part 1 - XLF May Cross Its 100-Day Moving Average: Is It Time to Buy?

• Part 2 - What Are XLF’s Year-to-Date Outflows?

• Part 3 - VFH Falls below Its 100-day Moving Average: Is This a Turnaround?