April ETF Flows: GLD Assets Drop 18.8%
Investors yanked $6.77 billion out of "GLD," the world's biggest gold bullion ETF last month, on the back of the yellow metal's 7.6 percent drop in price that jeopardizes its 12-year bull run. GLD ended April with nearly 19 percent fewer assets than it had at the end of March.
The flip side to gold's woes is that investors embraced equities last month, fueling net ETF inflows of nearly $10 billion, and helping lift total U.S.-listed ETF assets 1.6 percent higher than in the prior month to a record of $1.49 trillion, according to data compiled by IndexUniverse.
The upheaval in gold markets caused SPDR Gold Shares (NYSEArca: GLD) to lose its status as the world's second-biggest ETF. The new No. 2 fund, the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), climbed from the No. 3 spot it has held for more than two years. VWO lost assets as well, meaning the gold-market dynamics are solely what drove GLD's sharp drop in assets.
"In April, investor confidence in gold was absolutely shattered, and I think the massive outflow from GLD is a reflection of that," said Sumit Roy, an analyst and managing editor at HardAssetsInvestor.com.
"The QE-gold link has been broken, which is leading to capitulation by a lot of bulls," Roy said, referring to the way the Federal Reserve's "quantitative easing" program of bond buying had fueled interest gold.
Thank You, Mr. Bernanke
It's worth noting that many of last month's most popular funds were getting traction in connection with ongoing anxiety surrounding the macroeconomic environment or due to the consequences of loose-money policies courtesy of the Fed and of the Bank of Japan.
Last month's two most popular funds were focused on Japan, which has unleashed a fury of "quantitative easing" that has rekindled investor interest in the Land of the Rising Sun.
The iShares MSCI Japan Index Fund (NYSEArca: EWJ) pulled in $2.72 billion in April, making it the most popular ETF last month.
Its currency-hedged competitor, the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ), which protects U.S. investors from the deleterious effects on returns of a weakening yen, meanwhile gathered $1.45 billion. DXJ is the mostly popular U.S.-listed ETF so far this year, and is now a nearly $7.7 billion fund.
The Nos. 3 and 4 ETFs on the "Top Gainers" table were funds that cherry-pick low-volatility stocks, suggesting that continuing anxiety about the economy and markets isn't too far from the surface.
The iShares MSCI USA Minimum Volatility Index Fund (NYSEArca: USMV), quickly becoming one of the few blockbuster ETFs to emerge in the past few years, gathered nearly $1 billion in April and ended the month with $3.68 billion.
The PowerShares S&P 500 Low Volatility Fund (NYSEArca: SPLV), a hit from the day it launched about two years ago, also pulled in nearly $1 billion last month, lifting its assets to $5.43 billion.
Wages Of The Yield-Hungry
The last piece of the Fed-linked flows picture was in the realm of fixed-income ETFs, as investors showed both sober and conventional choices on the short end of the yield curve and also more creative risk taking in terms of finding viable income-generating funds in an era of ultra-low bond yields.
On the one hand, the iShares Barclays Short Treasury Bond Fund (NYSEArca: SHV) was the fifth-most-popular fund last month, garnering $892.8 million in inflows, lifting its total assets to $4.19 billion. In the same vein, the Vanguard Short-Term Corporate Bond ETF (NYSEArca: VCSH) added $633.6 million in new assets, making it a more than $6 billion fund.
On the more daring front, the PowerShares Senior Loan Portfolio (NYSEArca: BKLN), the first ETF of its kind, serving up adjustable-rate securities, pulled in $734.2 million in new money last month, lifting assets in the fund that was a hit from the start to $3.76 billion.
A similar ETF, the iShares Floating Rate Note Fund (NYSEArca: FLOT), pulled in $681.9 million, and ended the month with $1.57 billion in assets, in another sign investors aim to become crafty in the ways they grapple with the current era of Fed-fueled "financial repression."
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