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Yellen holds the cards for rate-sensitive ETFs

By Benzinga
Asset Management


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The Federal Reserve passed on raising interest rates following its October meeting, but Federal Reserve Chair Janet Yellen's comments before Congress earlier Wednesday indicate the Fed chief is mulling a boost to borrowing costs in December.

How investors treat rate-sensitive stocks and exchange-traded funds this time around remains to be seen, but conventional wisdom usually dictates that as Treasury yields rise in anticipation of higher interest rates, market participants ditch sectors such as consumer staples, real estate investment trusts (REITs) and utilities.

Recent U.S. Equity ETFs Performances

Last month, U.S. equity ETFs added $10 billion in new assets, nearly triple the $3.7 billion that flowed into international equity funds. However, international stock funds retain their year-to-date advantage over their U.S.-focused rivals by a margin of $23.1 billion to $17.7 billion, according to State Street Global Advisors data.

Sector ETFs were once again popular with investors in October, and against the backdrop of low interest rates, market participants piled into rate-sensitive sector funds. For example, utilities ETFs added nearly $210 million in new assets last month, according to State Street data.

Read more at Benzinga.

Photo:Marilyn Roxie

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