Record inflow into largest S&P 500 fund

On Wall Street, those who invested in the S&P 500 instead of taking a defensive position in 2023 won. Record inflows were recorded to the largest fund tracking the index. The winning strategy for investors on Wall Street this year was to take a position in the S&P 500 in a very traditional way instead of portfolio diversification strategies such as choosing sectors, doing options transactions, and dividend hunting. While the 4 percent rise in the S&P 500 this month increased the index's 2023 gain to 24 percent, according to Bloomberg Intelligence data, there has been an inflow of $69 billion to stock funds (ETFs) so far in December. This marked the strongest monthly inflow in the last two years. More than $42 billion also inflowed to the largest fund tracking the S&P 500, the $494 billion SPDR S&P 500 ETF Trust. This meant a record monthly inflow when data going back to 1998 were considered. That’s proof that buying and holding the benchmark index continues to be a strategy that has worked time and time again. “It’s clear that the best way to navigate the investment landscape is to invest in the S&P 500,” said Art Hogan, chief market strategist at B. Riley Wealth. “If you started this year thinking ‘everyone’s saying a recession is coming, so I’m going to be defensive,’ you’ve been punched in the nose.” “This is by no means unexpected,” said Seema Shah, chief global strategist at Principal Asset Management. “The first sign that there was a slight shift in Fed Chair Powell’s stance was that it opened the floodgates to a big rush into equities.”