ETF Insights: Top 5 Fund Flows and Segments for June 2023

For the month of June 2023, the Federal Reserve’s decision to pause interest rate hikes was welcomed news to the market, as the pace of inflation has begun to slow from May’s CPI reading. Though the Fed also intimated that rate hikes may continue into the future, the strong performance of US equity markets continued in the present. The Trackinsight ETF segments that had the greatest net fund flows were US Large Cap ($33.13 bn), US Small Cap ($5.29 bn), US Government Bonds ($4.86 bn), US Aggregate Bonds ($4.52 bn), and Developed Markets ex-US Blended ($4.43 bn).

A look at each Segment and ETF Flows

US Large Cap

US equity markets continue to climb higher, as the performance of US large cap equities was strong for the month of June 2023. All 11 US stock sectors were positive for the month, as the Dow Jones Industrial Average rose 4.7%, the S&P 500 advanced 6.6%, and the NASDAQ charged 6.8% higher. While the Vanguard S&P 500 ETF (VOO) garnered the most flows for the month, the Invesco S&P 500 ® Equal Weighted ETF (RSP) held the top performance among this grouping. The strong performance of the Consumer Discretionary (12.2%), Industrials (11.3%), and Materials (11.0%) sectors were contributing factors to the stellar performance of the overall market for the month.

US Small Cap

The strong performance of US equities was not specific to only large cap stocks, but was also evident in US small cap equities. June 2023 was an especially good month for small-cap equities, as both the Russell Small-Cap Growth Index and Small-Cap Value Index outperformed their large cap counterparts, returning 8.2% and 7.9% respectively. Though the SPDR Portfolio S&P 600 Small Cap ETF (SPSM) garnered the largest flows for the month, the Pacer US Small Cap Cash Cows 100 ETF (CALF) had the strongest performance of the group. The Vanguard Small Cap ETF (VB) and iShares Russell 2000 ETF (IWM) also had strong returns for the period in question.

US Government Bonds

With interest rates remaining elevated, higher income from bonds has resulted in US Government Debt remaining top of mind for investors. The iShares 20+ Year Treasury Bond ETF (TLT) had the largest inflow for the month and exhibited the best performance among its immediate group. Both the WisdomTree Floating Rate Treasury Fund (USFR) and Vanguard Long-Term Government Bond ETF (VGLT) had a positive return for the month. Though the Federal Reserve has momentarily paused their interest rate hikes, they have also intimated that additional rate hikes are expected in the future, as determined by incoming economic data.