Investors shed $23bn from world's biggest passive fund

Investors actively abandoned the world’s biggest passive fund during the onset of market mayhem.

The SPDR S&P 500 (SPY) exchange-traded fund suffered a record $23.6 billion in outflows last week amid the worst momentum swing in history for the underlying US equity benchmark.

Outflows amounted to 8 per cent of the fund’s total assets at the start of the week, a rate of withdrawals not seen since August 2010. A blow-up in volatility-linked products sent markets haywire, eliciting waves of risk aversion from jittery investors.

Strategists at JP Morgan said the swiftness and severity of the positioning unwind is a sign that further selling from the likes of commodity trading advisers and risk parity funds “should be limited from here”.

“The picture we are getting in the US equity ETF space is one of advanced rather than early state de-risking,” they added.

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A healthy correction may not be the end result of the global market rout

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The five-session stampede for the exits erased the previous nine weeks of inflows into the fund, which is issued by State Street. The combination of price declines and withdrawals erased $38.6bn in SPY’s assets. That’s nearly double the second-worst showing of $19.4bn in asset shrinkage during the week ending August 21, 2015, when China’s surprise devaluation of the yuan roiled markets. Prior to this recent market tumult, extreme enthusiasm for US equities had propelled the fund’s total assets above $300bn.

Flows activity in similar S&P 500 ETFs offered by BlackRock and Vanguard was much more muted last week. The iShares Core S&P 500 ETF actually took in $634.5 million, while the Vanguard S&P 500 ETF saw only a modest $209m exit the fund.

E-cigarette report

Big tobacco believes UAE is 'seriously considering' lifting e-cigarette ban

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Who is Tim-Berners Lee?

Sir Tim Berners-Lee was born in London in a household of mathematicians and computer scientists. Both his mother, Mary Lee, and father, Conway, were early computer scientists who worked on the Ferranti 1 - the world's first commercially-available, general purpose digital computer. Sir Tim studied Physics at the University of Oxford and held a series of roles developing code and building software before moving to Switzerland to work for Cern, the European Particle Physics laboratory. He developed the worldwide web code as a side project in 1989 as a global information-sharing system. After releasing the first web code in 1991, Cern made it open and free for all to use. Sir Tim now campaigns for initiatives to make sure the web remains open and accessible to all.

Hili 2: Unesco World Heritage site

The site is part of the Hili archaeological park in Al Ain. Excavations there have proved the existence of the earliest known agricultural communities in modern-day UAE. Some date to the Bronze Age but Hili 2 is an Iron Age site. The Iron Age witnessed the development of the falaj, a network of channels that funnelled water from natural springs in the area. Wells allowed settlements to be established, but falaj meant they could grow and thrive. Unesco, the UN's cultural body, awarded Al Ain's sites - including Hili 2 - world heritage status in 2011. Now the most recent dig at the site has revealed even more about the skilled people that lived and worked there.

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COMPANY PROFILE

Name: HyperSpace

Started: 2020

Founders: Alexander Heller, Rama Allen and Desi Gonzalez

Based: Dubai, UAE

Sector: Entertainment

Number of staff: 210

Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners

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Learn more about Qasr Al Hosn

In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:

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