January 26, 2018

Science & Technology Funds Heat Up

by Patrick Keon.

Funds in Thomson Reuters Lipper’s Science & Technology Funds peer group (including both mutual funds and ETFs) took in almost $1.7 billion of net new money (the group’s eleventh largest weekly net inflow in history) for the fund-flows week ended Wednesday, January 24. Last week’s net inflows brought to mind the tech bubble days as it was the largest one-week positive flow since the fund-flows week ended January 5, 2000 (+$1.8 billion that week). A better-than-anticipated earnings report from Netflix (one of the FAANG stocks) spurred the sector this past week. Shares of Netflix experienced a one-day gain of 9.98% on the strength of a Q4 earnings report that far exceeded expectations in regard to the number of new subscribers. Netflix stock closed at a record high of $250.29 per share that day, which drove the company over the $100-billion market-capitalization barrier for the first time.

Flows into the science & tech group started to ramp up in fourth quarter 2017, with a net inflow of $4.7 billion for the quarter, and have continued into the new year with $3.0 billion for 2018 to date. The group’s net inflow for Q4 was its second largest quarterly inflow in almost two decades (+$5.9 billion for Q2 2000) behind only the $5.0 billion increase for fourth quarter 2015. The sector also performed well since the end of Q3 2017; the average science & tech fund gained 14.5% for that period.

The lion’s share of the net inflows (+$1.6 billion) to the science & tech peer group last week were attributable to ETFs. The positive flows into that group were heavily concentrated, with five products accounting for $1.3 billion. Technology Select Sector SPDR (XLK) paced the peer group, taking in $512 million of net new money, followed by VanEck Vectors Semiconductor ETF (SMH), Fidelity MSCI Information Technology ETF (FTEC), Global X Robotics & Artificial Intelligence ETF (BOTZ), and Amplify Transformational Data Sharing ETF (BLOK), which had net inflows of $250 million, $199 million, $184 million, and $162 million, respectively.

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