Yearly ETF Inflows Hit $125B Despite Fed Rate Hike

March 17, 2017

The first rate hike of the year from the Federal Reserve didn't dissuade investors from buying exchange-traded funds. Inflows into U.S.-listed ETFs continued at a torrid pace, as $19 billion came into the space in the week ending Thursday, March 16, according to FactSet. The year-to-date total for inflows now stands at $124.7 billion.

U.S. equity funds took in the bulk of new money as the S&P 500 hovered near record highs. Inflows into this segment totaled $13.2 billion. 

International equity ETFs also garnered favor, with $3.5 billion worth of weekly inflows. A victory for a mainstream party in the Dutch elections over a populist anti-EU party was a sigh of relief for investors who want to see the status quo maintained in Europe. 

Meanwhile, U.S. fixed-income ETFs saw inflows to the tune of $1.9 billion despite the Fed's rate hike on Wednesday. Even though it was the second rate hike in three months, the Treasury market rallied after the news. The 10-year bond yield fell from around 2.6% to 2.5% week-over-week (bond prices and yields move inversely).

International fixed-income ETFs had much more modest inflows, of $144 million, while commodity ETFs had inflows of $241 million.

Dividend & Small-Cap ETFs See Inflows
The SPDR S&P 500 ETF (SPY) took the top spot on the weekly inflows list, with $2.5 billion of inflows, followed by the Vanguard Dividend Appreciation Index Fund (VIG), with its $1.5 billion of inflows. 

VIG was one of two dividend-focused ETFs to make the top 10. The other was the Vanguard High Dividend Yield Index Fund (VYM), with $673 million worth of inflows. 

A pair of small-cap funds made the cut as well. The Vanguard Small-Cap Index Fund (VB) and the Vanguard Small Cap Value Index Fund (VBR) had creations of $1 billion and $697 million, respectively. 

Other standouts in the top 10 included the iShares 20+ Year Treasury Bond ETF (TLT), the SPDR Oil & Gas Exploration & Production ETF (XOP) and the Utilities Select Sector SPDR Fund (XLU). Each fund had about $600 million worth of inflows for the week.

Outflows From 'JNK' & 'XLE' As Oil Prices Drop
On the outflows side, the SPDR Bloomberg Barclays High Yield Bond ETF (JNK) easily took the top spot, with redemptions of $947 million. Junk bonds hit a bit of a road bump during the past week as the sell-off in oil prices raised worries about energy sector defaults. 

The Energy Select Sector SPDR Fund (XLE) also fell out of favor amid the oil price skid. It had outflows of $259 million in the period. 

Other sector or industry funds to see redemptions were the SPDR S&P Regional Banking ETF (KRE), the iShares U.S. Real Estate ETF (IYR), the iShares U.S. Technology ETF (IYW) and the Consumer Staples Select Sector SPDR Fund (XLP). Outflows from these funds ranged from $120 million to $240 million.

Finally, the iShares MSCI Japan ETF (EWJ) was a notable international fund to see sizable redemptions. Outflows for the week for EWJ totaled $510 million.

For a full list of this week's top inflows and outflows, see the tables below:
 

Top 10 Creations (All ETFs)

Ticker Name Net Flows ($,mm) AUM ($, mm) AUM % Change
SPY SPDR S&P 500 ETF Trust 2,528.29 247,146.08 1.03%
VIG Vanguard Dividend Appreciation Index Fund 1,525.85 25,552.43 6.35%
VEA Vanguard FTSE Developed Markets ETF 1,233.46 46,839.04 2.70%
VB Vanguard Small-Cap Index Fund 1,046.87 18,738.76 5.92%
VBR Vanguard Small Cap Value Index Fund 696.77 11,721.05 6.32%
IVV iShares Core S&P 500 ETF 692.11 102,092.78 0.68%
VYM Vanguard High Dividend Yield Index Fund 673.14 18,687.65 3.74%
TLT iShares 20+ Year Treasury Bond ETF 632.04 6,104.91 11.55%
XOP SPDR S&P Oil & Gas Exploration & Production ETF 600.05 2,440.69 32.60%
XLU Utilities Select Sector SPDR Fund 569.04 7,187.88 8.60%

Top 10 Redemptions (All ETFs)

Ticker Name Net Flows ($,mm) AUM ($, mm) AUM % Change
JNK SPDR Bloomberg Barclays High Yield Bond ETF -946.72 11,072.10 -7.88%
QQQ PowerShares QQQ Trust -577.55 46,331.74 -1.23%
EWJ iShares MSCI Japan ETF -509.66 15,810.72 -3.12%
XLE Energy Select Sector SPDR Fund -258.75 16,818.49 -1.52%
EFV iShares MSCI EAFE Value ETF -237.03 4,734.74 -4.77%
KRE SPDR S&P Regional Banking ETF -234.52 4,016.81 -5.52%
IYR iShares U.S. Real Estate ETF -225.39 4,592.80 -4.68%
IWN iShares Russell 2000 Value ETF -204.33 8,799.33 -2.27%
IYW iShares U.S. Technology ETF -147.38 3,309.68 -4.26%
XLP Consumer Staples Select Sector SPDR Fund -123.85 8,930.87 -1.37%

ETF Weekly Flows By Asset Class

  Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity 13,179.78 1,630,692.63 0.81%
International Equity 3,465.99 574,933.91 0.60%
U.S. Fixed Income 1,940.88 434,886.24 0.45%
International Fixed Income 144.11 43,385.74 0.33%
Commodities 241.06 61,777.91 0.39%
Currency -35.23 2,919.21 -1.21%
Leveraged 170.60 26,854.57 0.64%
Inverse -16.78 17,178.12 -0.10%
Asset Allocation -13.41 6,637.68 -0.20%
Alternatives -77.40 3,825.06 -2.02%
Total: 18,999.60 2,803,091.06 0.68%

Top 10 Volume Surprises, Funds >$50 mm AUM

Ticker Name Average Volume
(30 Day)
1 Week Average
Volume
% of Average
HOLD AdvisorShares Sage Core Reserves ETF 639 3,086 482.73%
RIGS RiverFront Strategic Income Fund 58,817 192,666 327.57%
FNI First Trust Chindia ETF 34,021 107,015 314.55%
CATH Global X S&P 500 Catholic Values 13,211 41,878 316.98%
HFXI IQ 50 Percent Hedged FTSE International ETF 77,974 328,627 421.46%
IBDB iShares iBonds Mar 2018 Term Corporate ETF 9,576 24,891 259.94%
INKM SPDR SSgA Income Allocation ETF 6,586 18,094 274.71%
FEP First Trust Europe AlphaDEX Fund 84,778 216,014 254.80%
FTXO First Trust Nasdaq Bank ETF 65,247 270,952 415.27%
GRI Cohen & Steers Global Realty Majors ETF 14,227 24,396 171.48%

Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

 

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