Investors Fleeing To This Treasury ETF

September 02, 2014

If you’re reading tea leaves in ETF flows, this one’s ominous.

Sometimes I look at market info and I wonder, “Do they know something I don’t know?”

The answer to the question is generally yes, but today’s data seem like a bit of a head scratcher. While we see massive outflows from the world’s largest ETF, the S&P 500 SPDR (SPY | A-98), of more than $6.5 billion, we saw big inflows into two interesting places.

The first is that we saw money flowing into alternative S&P 500 ETFs, like the cheaper Vanguard S&P 500 ETF (VOO | A-96) and the iShares Core S&P 500 ETF (IVV | A-98), which pulled in $1.2 and $1.1 billion, respectively. But overall, the U.S. Large Cap Equity segment lost more than $4.5 billion in August, along with big downticks in U.S. midcaps and most U.S. sectors.

Big Segment Losers

Flows ($,B)
Segment Aug-14
Equity: U.S. - Large Cap -4,552.55
Equity: U.S. Utilities -1,863.34
Equity: Developed Europe - Total Market -1,675.72
Equity: U.S. - Mid Cap -1,214.98
Leveraged Equity: U.S. - Small Cap -691.48
Leveraged Equity: U.S. - Mid Cap -556.51
Equity: U.S. Energy -493.88
Fixed Income: U.S. - Corporate High Yield Short-Term -464.33
Commodities: Precious Metals Gold -312.53
Equity: Italy - Total Market -257.44

 

 

 

 

 

 

 

 

So where did all this money go? Because after all, August was a good month, with net flows of more than $15 billion in net flows, on the back of generally rising markets. Some of it went into narrower takes on the U.S. equity market—bets on value and growth. Some, as Matt and I have been suggesting, is flowing into the emerging market space.

Big Segment Winners

Flows ($,B)
Segment Aug-14
Fixed Income: U.S. Government Treasury Intermediate 2,245.63
Equity: Emerging Markets - Total Market 1,663.62
Equity: U.S. - Large Cap Growth 1,390.11
Fixed Income: U.S. Government Treasury Short-Term 1,243.38
Equity: U.S. Consumer Non-cyclicals 1,108.82
Equity: U.S. - Large Cap Value 1,036.29
Fixed Income: U.S. - Corporate High Yield 998.05
Equity: U.S. Consumer Cyclicals 865.55
Equity: U.S. Health Care 809.75
Equity: Hong Kong - Total Market 792.89

 

 

 

 

 

 

 

 

But two of the top four slots are taken up by the most boring asset classes in the universe—short-term and intermediate-term U.S. Treasurys. The biggest individual ETF winner of all is actually the iShares 7-10 Year Treasury ETF (IEF | A-58), followed closely by the iShares 1-3 Year Treasury ETF (SHY | A-97) and the iShares 3-7 Year Treasury Bond ETF (IEI | A-72).

 

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