On Wednesday, $8.2 billion in new shares were created in State Street Corp.’s SPDR S&P 500 ETF, the market’s oldest and largest fund. Daily fund flows can be volatile, particularly in this $250 billion ETF, which State Street said is the most-traded security in the world.
Big institutional investors use the ETF to put cash to work in a variety of ways while they select individual stocks.
That wasn’t necessarily the case Wednesday, said Matt Bartolini, head of SPDR Americas research for State Street. He examines daily flows in a larger context, looking at trading in options, futures and other ETFs to determine if a one-day flow is part of a larger trade. While there was some options activity Wednesday, it wasn’t enough to explain the big inflow, which was the ninth-largest in the fund’s history.
“One-day flows around market events, like [President Donald] Trump’s address to Congress, can be indicators of market sentiment,” Mr. Bartolini said.
Still, such enthusiasm on the part of retail investors, after years of apathy, could be a reinforcing sign that the yearslong rally is getting tired. Wall Street lore has it that individual investors are often late to step in or out of the market.