Corporate executives are warning that the volatile market, combined with the Fed’s rate hikes and the war in Ukraine will negatively impact fourth-quarter earnings, while analysts have downgraded earnings expectations in every sector. However, there may be a bright spot during earnings season, ETF issuers. According to ETF.com data, ETF flows came in at $203 billion in the fourth quarter, nearly double the third quarter's flows of $105 billion. The increase in flows should help fourth-quarter earnings for ETF issuers. It would also be a reversal from the previous quarter when State Street reported $14 billion in net outflows and Schwab’s ETF revenue declined sharply. ETF inflows at BlackRock’s iShares also fell by more than half compared with the third quarter of last year. The surge in inflows during the fourth quarter can be attributed to the rising demand for fixed-income ETFs. Investors are flocking to bond ETFs as they are considered safe havens during downturns. BlackRock President Rob Kapito said on the company’s third-quarter earnings call, “We're going to see dramatic and large inflows into fixed income over the next year as interest rates rise.” ETF.com data shows that fixed-income funds saw inflows of $61 billion in the fourth quarter, up nearly 13% from the $54 billion in the prior-year quarter.
Finsum:While analysts are predicting a dismal fourth-quarter earnings season, ETF issuers may be a bright spot as fixed-income funds saw inflows of $61 billion during the quarter.