In the U.S. last week there was much to celebrate—along with the Fourth of July, employers piled on new jobs and drove the unemployment rate down to the lowest level since September 2008. A strengthening labour market is just the sign policy-makers are looking for to signal that the U.S. has left the darkest days of the financial crisis behind it.
June was also a great month for exchange-traded funds (ETFs), according to the latest landscape report from BlackRock—$21 billion flowed into U.S. equities via ETFs during the month, bringing total ETF inflows to a high of $36.3 billion. That’s the highest inflows recorded this year—and a sign that the U.S. is making investors very happy. And while the most popular sectors so far this year have been fixed income and European and Japanese equities, U.S. equities are now playing catch-up as investors show their faith in the ability of the U.S. economy to overcome the significant barriers to growth it has faced over the last few years.
As investors pump more money into U.S. equities, some believe we’re headed for a crash of epic proportions. If you have time, this article in Forbes sums it all up by presenting 23 worrying charts about the state of global capital markets and why investors need to be careful and ignore the voices in their heads saying “This time it’s different.”
But as investors dump fixed income, they are showing themselves ready for risk and the returns that come with it. After all, they’ve been sitting on the sidelines for a long time.
Whether you’re bullish or bearish, however, ETF inflows are clear on one thing: investors love the U.S., and they’re getting excited about any and all signs that the 2008 crisis is well and truly behind the world’s largest economy.