ETF flows last week showed no sign of widespread retail selling despite a difficult week for stocks. According to Sina Finance, U.S.-registered equity ETFs investing in U.S. stocks recorded net inflows every day, including Thursday, when the S&P 500 fell 4.4% and the Nasdaq 100 dropped 6.4%. Corporate bond ETFs, which carry equity-like risk, also saw net inflows, particularly on Friday.
Equity ETFs are also traded by hedge funds and other institutions, so their flows alone cannot reveal retail behavior. Leveraged ETFs, whose participants are mainly retail investors, offer a clearer indicator: bullish leveraged ETFs continued to see net inflows, while bearish leveraged ETFs saw outflows, suggesting investors were taking profits on short positions. Overall, retail investors did not engage in concentrated panic selling last week. Whether they remain calm this week remains to be seen; the article’s author said the AI rally may not be over after this period of volatility.