Dividend-Rich ETFs Haul In Huge Assets

March 15, 2013


Signs Of A Spent Bond Market

Dividend-rich equity funds have clearly been part of the order flow in the past several months, according to Paul Weisbruch, an ETF trader with King of Prussia, Pa.-based Street One Financial, who considers the replacement of bonds with high-yielding equities as plausible, if not totally sensible.

“These funds, VYM and HDV, look a lot like the low-volatility equity funds,” Weisbruch noted, saying the big flows in the past two years into ETFs such as the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) and the iShares MSCI USA Minimum Volatility Index Fund (NYSEArca: USMV) are part and parcel of the same concern investors have about owning too many bonds at a time when inflation may be close to rearing its head.

SPLV and USMV, which have been around for nearly two years, now have assets of $4 billion and $1.78 billion, respectively, according to data compiled by IndexUniverse.

Other signs Weisbruch sees that suggest the bond market is looking overbought is the put options some investors are buying on certain popular bond ETFs, such as the iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT) and particularly the iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca: HYG).

HYG also reared its head in our latest ETF Short Report.  The number of HYG shares being shorted rose by 52 percent in February, a clear sign at least some investors think the junk bond market is likely to correct downward.

Index Universe's Segment Title Net Flows ($, mm) AUM ($, mm) % of AUM
Equity: U.S. - High Dividend Yield 1,404.00 49,961.29 2.81%
Equity: Emerging Markets - High Dividend Yield 37.13 6,247.30 0.59%
Equity: Global - High Dividend Yield 20.69 872.25 2.37%
Equity: Global Ex-U.S. - High Dividend Yield 6.54 2,095.42 0.31%
Leveraged Equity: U.S. - High Dividend Yield 0.00 27.07 0.00%
Equity: Asia-Pacific - High Dividend Yield 0.00 34.48 0.00%
Equity: Australia - High Dividend Yield 0.00 75.22 0.00%
Equity: Developed Markets Ex-U.S. - High Dividend Yield 0.00 2,392.68 0.00%
Equity: Developed Europe - High Dividend Yield 0.00 33.43 0.00%


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