November 13, 2020

COVID-19 Vaccine News Catapults Markets to Near-New Highs: SPY Attracts its Strongest Weekly Net Inflows Since January 24, 2018

by Tom Roseen.

Equity funds (including ETFs) witnessed their first weekly net inflows in 14 for the Refinitiv Lipper fund-flows week ended Wednesday, November 11, 2020. They attracted some $23.8 billion, their strongest weekly net inflows since the week ended December 27, 2017, and third largest on record.

Investors cheered the announcement by Pfizer and BioNTech of their successful Phase 3 study of a COVID-19 vaccine, which was reported to have a 90% effective rate of preventing infection. The firms’ plan to request Emergency Use Authorization from the Food and Drug Administration pushed U.S. markets to near-new highs, with the Russell 2000 Price Only Index posting the strongest returns of the broadly followed U.S. indices, returning 7.54% for the fund-flows week.

The vaccine-related rally gave small-cap, value, cyclical, and other out-of-favor issues a boost as investors initially turned their backs on the recently popular “stay-at-home” and technology issues, with the NASDAQ Composite Price Only Index (+1.70%) posting the weakest returns of the group.

Nonetheless, weekly net flows for equity funds and ETFs remained lopsided, with conventional equity funds (ex-ETF) suffering their twenty-ninth consecutive week of net outflows, handing back $2.2 billion during the week. Lipper’s Large-Cap Growth Funds (-$790 million) classification suffered the largest redemptions of the conventional equity funds classifications for the week.

Conversely, for the second week in a row, equity ETFs attracted some $26.0 billion for the most recent fund-flows week, their largest weekly net inflows since November 16, 2016. SPDR S&P 500 ETF (SPY, +$13.7 billion) took in more than half of the net money for the week of all individual equity ETFs, followed by iShares Russell 2000 ETF (IWM, +$1.3 billion). At the other end of the spectrum, Invesco QQQ Trust 1 (QQQ, -$1.4 billion) experienced the largest individual net redemptions.

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