Technology stock ETFs have seen strong inflows over the past week, after suffering outflows for much of the month of October, despite concerns about rising valuations leading to a potential bubble in the asset class.
Some €1.8bn has flown into tech stock ETFs between 25 and 27 October, reversing outflows seen over previous days, according to TrackInsight data.
The choppy flows over the past month reflect the bigger picture seen this year, with technology ETFs suffering some large outflows on occasion. For example, 12 June saw €1.8bn exit the asset class, while on 3 June outflows reached €1.7bn.
However, demand still continued to outstrip withdrawals, and over the year to date cumulative flows have remained positive throughout the period, reaching €7.1bn by 27 October.
Meanwhile, performance has remained strong over recent weeks, and particularly shot up towards the end of the month, after a number of US technology giants reported strong results for the current earnings season.
Strong Q3 results
On Friday 27 October, tech stocks including Alphabet, Amazon and Microsoft enjoyed strong gains after reporting positive results.
Alphabet, which derives most of its revenue from Google, reported a rise in profits to $7.8bn in the third quarter, up from $5.6bn for the same time last year, and saw shares rise some 3% in morning trading.
Amazon reported a 34% increase in sales for the quarter to $43.7bn, while revenues also jumped 24% year-on-year, with the news sending its share price up nearly 8%.
Meanwhile, Microsoft reported a 12% rise in Q3 revenues year-on-year to $24.5bn, while the profits were up 16% to $6.6bn; its shares were up around 5% as a result.
Over the month of October, technology stock ETFs have risen nearly 8%, according to TrackInsight data, while over 2017 so far they are up 17.8%.
However, some investors have been concerned that this strong rally could be a sign of an impending bubble in the asset class, resulting in periods of panic selling, even as the sector continues to reach new record highs.
This trend can be seen in information technology stock ETFs in October, with investors taking out some money despite strong stock gains.
On 27 October, the asset category saw withdrawals of €67m, but over the month cumulative flows remain positive at €430m. At the same time, performance has been stellar, with IT stock ETFs soaring 10.5% over the month to 27 October.