According to “Bloomberg”, compared to different active strategies to fight risks, there is nothing more effective in the stock market strategy in 2023 than just holding the S&P 500 Index.
As 2023 draws to a close, investors are grappling with the year’s simplicity lessons.
After rising 4% this month, the S&P 500 is up 24% in 2023. Equity ETFs have absorbed nearly $69 billion so far in December, the best month for inflows in two years, according to data by Bloomberg Intelligence.
Investors poured more than $42 billion into the $494 billion SPDR S&P 500 ETF Trust (SPY-US), the largest fund that tracks the S&P 500 Index, in December, expected to be the best month since 1998.
It’s a testament to a proven buy-and-hold approach that the benchmark is now trading near new highs that some investment strategies designed to be defensive have lagged behind this year.
Art Hogan, chief market strategist at B. Riley Wealth, said if you start this year thinking, “Everybody’s saying a recession is coming, so you should invest defensively,” you’ve already lost.
As we head into 2023, many strategists expect stocks to see only modest gains at best after an innings in 2022. But there were signs that the economy is continuing to grow and inflation has slowed, and stocks have climbed constantly throughout the year. Stocks have been rallying in recent days after Federal Reserve Chairman Jerome Powell predicted that interest rates could fall next year.
Despite falling 1.5% on Wednesday, the S&P 500 rose 0.8% for the week, marking its eighth straight week of gains and its longest winning week since 2017.
Seema Shah, chief global strategist at Principal Asset Management, said any sign of a slight change in Ball’s stance would open the door for money to flood into stocks, so the development was not entirely unexpected.
According to Athanasios Psarofagis Bloomberg, although the total capital injection into stock funds this year is US $ 349 billion, slightly lower than the US $ 398 billion in 2022, the four S&P 500 ETFs have received more than one third of the total capital injection. inflows were the largest ever. That hurts funds that track specific sectors like energy and utilities.
US stock industry ETF fund outflows this year reached $12 billion, the worst year on record.
This withdrawal was obvious. Data shows that only 31% of “active” ETFs this year (including theme funds, ESG products, factors and active management tools) outperformed the benchmark index, setting the lowest performance rate since 2014.
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