There are already several market shocks in the first quarter of 2023. Even worst-performing funds were able to draw in significant quantities of money.
Unsurprisingly, American ETFs that monitor the dwindling natural gas market and those that place hefty bets on the once-booming tech sector have seen their prices decline. Yet, these funds were among the top performers in terms of inflows.
Factors Affecting the Investors
Investors are affected by shifting rate expectations, a banking crisis, perplexing inflationary signals, and other factors. In this environment, the most reliable trend was money pouring into the security of government ETFs.
Therefore, a calendar-based read of flows may present an inaccurate image. For instance, recurring tax worries or year-end portfolio adjustments may impact activity. Additionally, as leveraged products are designed to be held for a limited time, big flows can abruptly reverse.
The ProShares UltraPro Short QQQ (SQQQ) pays the inverse return of Nasdaq 100 greatly. On the other hand, Direxion Daily Semiconductors 3X Shares is a fund. It pays three times the inverse return of the ICE Semiconductor Index. Both of these have diminished by around 40% this year. But, according to Bloomberg, each ETF has experienced significant inflows.
The ProShares Ultra Bloomberg Natural Gas (BOIL) was the worst-performing ETF in the quarter, losing 80%, as the hot winter reduced demand for gas and thus also decreased gas prices. Yet, according to statistics collated by Bloomberg, investors have added a net $1.67 billion to the fund since the year’s beginning, translating to flows equal to 291% of its overall market worth.
Stocks with Good Net Outflows
Even though the top 10 funds had excellent first-quarter performance, six saw net outflows. MicroSectors FANG+ Index 3X Leveraged ETN (FNGU), a fund that triples gains in large tech equities, has increased 152% this year. Just $50 million in net inflows were made to the fund.
The ARK Innovation ETF (ARKK), Cathie Wood’s flagship investment, increased by 29% in the first quarter but is still down from its peak in February 2021. The quarter after last year’s tech turmoil, which caused the fund to drop 67%, saw net flows for the fund of just $199 million.
The Ark Next Generation Internet ETF (ARKW) and the ARK Fintech Innovation ETF (ARKF), two of Wood’s best-performing ETFs, had net outflows during the quarter.
With a rise of 70%, Bitcoin was another notable winner this quarter. ProShares Bitcoin Strategy ETF (BITO), a vehicle related to the asset class, also had a 70% increase. It had net flows of $35 million.
