Filed Under:Life Insurance, Life Planning Strategies

ETFs get $41B, erasing stock withdrawals on economy

The reversal is the latest sign of confidence in a five-year bull market that has gained momentum.
The reversal is the latest sign of confidence in a five-year bull market that has gained momentum.

(Bloomberg) -- Investors who beat a path out of global equity markets earlier this year are stampeding back in.

More than $41 billion has returned to U.S. exchange-traded funds that own shares in the past four weeks, reversing withdrawals that swelled to as much as $40.2 billion last month, according to data compiled by Bloomberg. Cash has flowed back as the MSCI All-Country World Index rallied 5.8 percent from the four-month low it reached Feb. 4, when turmoil in emerging markets spurred speculation the global recovery would slow.

Federal Reserve Chair Janet Yellen has pledged to maintain Ben S. Bernanke’s policy of cutting bond purchases in measured steps. While policy makers monitor data to determine if recent weakness in the economy is temporary, “if there’s a significant change in the outlook, certainly we would be open to reconsidering,” she said in testimony to Senate Banking Committee on Feb. 27.

Bond purchases

“I’m not committing new money to the market until I see signs there’s a reason to,” Schultz said. “We still need to see signs that the weather-related phenomenon was truly that -- a slowdown in economic growth because of people not necessarily spending as much as they may have. The S&P has come a long way. It needs a new catalyst to get it moving forward.”

Investors are shifting to Europe while withdrawing from emerging markets as optimism mounts that growth in advanced economies is strengthening while developed economies are poised to falter.

Copyright 2016 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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