The global market maelstrom spurred money managers to yank a record $17.4 billion from the mighty SPDR S&P 500 ETF (SPY) over the past four trading sessions. The $8 billion removed on Tuesday alone was the third-largest daily withdrawal in the post-crisis era.
The last time redemptions were close to matching this frenetic pace? In late 2007, when cracks in U.S. equities began to show before the global financial crisis unfolded.
Even with the historic wave of outflows, the world’s largest ETF has received a net $2.4 billion of inflow this year to reach assets of $276 billion, while eking out a 0.85% gain.
Investors are catching their breath after the selloff, which followed the fastest-ever flow of money out of funds holding U.S. Treasuries and high-yield debt and into global stocks, in the week to Jan. 31. That spurred Bank of America’s equity sell signal to ring louder. The total inflow into stock funds globally last month surged to $102 billion, according to EPFR Global data.
The worst may be over for the S&P tracker, with bears easing back on hedging options. Contracts protecting against a 5% decline surged to their highest price ever relative to calls on Monday, according to three-month data compiled by Bloomberg. That position, known as skew, has since eased to less than a point above the five-year average.