Aug ETF Flows: Emerging Markets Defy Slide

September 02, 2010

Equity ETFs took a hit in August as fear roiled markets, but emerging markets dodged the bullet.

U.S.-listed ETF and ETN assets under management fell to $814 billion from $835 billion at the end of July, as the 4.3 percent slide in the Dow Jones industrial average last month translated in the ETF world into an exodus from equities and into bonds and gold, according to data compiled by IndexUniverse.com. U.S. ETF assets hit a high of $845 million in April.

But there was one notable exception: Emerging markets equities bucked the entire trend, with the Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) topping the inflows list and ending the month with more assets than when it started.

Indeed, while the developed world appears mired in sluggish growth and possibly worse, the emerging markets are humming along. VWO gathered $1.95 billion in new money, while EEM attracted $1.81 billion in net inflows. Both funds had more assets at the end of August than the previous month, meaning that market declines weren’t enough to offset flows. VWO closed the gap on EEM by about $400,000, ending with $30.35 billion, compared with $39.77 billion for EEM.

Bond-linked products and gold also featured prominently on the gainers list, as investors sought safe havens and predictable yields in the face of a faltering
U.S.
economy.

The SPDR Gold Trust (NYSEArca: GLD) gathered $815.1 million, though the rising tide of markets lifted its total assets by more than $4 billion to $52.16 billion.

The ProShares UltraShort 20+ Year Treasury ETF (NYSEArca: TBT) was fifth among the gainers, gathering about $585 million in new assets, while the iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) and the Vanguard Total Bond Market ETF (NYSEArca: BND) were seventh and eighth, with $497 million and $468 million in new money, respectively. Even the iShares S&P Preferred Stock ETF (NYSEArca: PFF) was in the top 10, with $454 million in new assets.

Another reflection of the anxiety in markets was the $603.5 million in new assets that poured into the iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX), a product that enables investors to profit from rising volatility. Those new assets represented a 43 percent increase that brought the total to $1.98 billion and put VXX in the No. 4 spot on the gainers list.

 

Top Gainers ($, Millions)
Ticker Name Issuer August Flows AUM at 8/31/2010 August Turnover
VWO Vanguard Emerging Markets Vanguard 1,946.15 30,348.94 10,973.73
EEM iShares MSCI Emerging Markets BlackRock 1,805.17 39,767.14 51,273.17
GLD SPDR Gold SSgA 815.09 52,158.80 25,616.52
VXX iPath S&P 500 VIX Short-Term Futures ETN Barclays Capital 603.47 1,979.89 10,636.37
TBT ProShares UltraShort 20+ Year Treasury ProShares 585.21 4,231.88 8,038.95
FAS Direxion Daily Financial Bull 3x Direxion 533.07 1,814.57 17,118.75
HYG iBoxx $ High Yield Corporate Bond BlackRock 497.16 6,306.14 2,004.52
BND Vanguard Total Bond Market Vanguard 468.02 8,921.53 1,570.41
PFF iShares S&P U.S. Preferred Stock BlackRock 454.58 5,240.81 1,093.79
EWH iShares MSCI Hong Kong BlackRock 374.42 1,976.32 2,070.12

Biggest Losers

The biggest losing funds in August were
U.S.
large-cap equities funds, including the SPDR S&P 500 ETF (NYSEArca: SPY), which topped the list with $6.63 billion in net outflows. Total assets for the world’s biggest ETF fell to $62.24 billion from $72.04 billion at the end of July.

The PowerShares QQQ ETF (NasdaqGM: QQQQ) of Nasdaq’s biggest companies suffered $2.08 billion in redemptions, and investors pulled $1.79 billion out of the small-cap iShares Russell 2000 ETF (NYSEArca: IWM).

Interestingly, the iShares Barclays TIPS Bond ETF (NYSEArca: TIP), a fund that tracks an index of inflation-protected U.S. Treasurys, had $332.8 million in redemptions, a measure of how much investor sentiment shifted away from concerns about inflation last month. TIP was tenth on the IndexUniverse.com losers list.

 

Biggest Losers ($, Millions)
Ticker Name Issuer August Flows AUM at 8/31/2010 August Turnover
SPY SPDR S&P 500 SSgA -6,631.53 62,241.04 493,488.96
QQQQ PowerShares QQQ Invesco PowerShares -2,076.96 15,802.45 66,915.11
IWM iShares Russell 2000 BlackRock -1,793.65 12,163.45 82,581.30
DIA Dow Diamonds SSgA -615.99 7,557.75 17,277.63
EWJ iShares MSCI Japan BlackRock -488.11 3,942.75 3,794.61
TLT iShares Barclays 20+ Year Treasury Bond BlackRock -426.54 3,194.99 17,347.31
XLK Technology Select Sector SPDR SSgA -412.37 3,678.58 5,645.78
XLI Industrial Select Sector SPDR SSgA -398.00 2,532.28 10,869.69
SHV iShares Barclays Short Treasury Bond BlackRock -374.70 3,703.24 968.49
TIP iShares Barclays TIPS Bond BlackRock -332.84 20,589.79 1,831.17

Giants Unchanged, Mostly

The biggest U.S.-listed funds may have taken a hit in August as fears of the possibility of a double-dip recession grew, but their positions were largely unchanged.

The five biggest ETFs remained SPY, GLD, EEM, iShares’ MSCI EAFE ETF (NYSEArca: EFA) of developed country equities outside
North America, and VWO, respectively.

The one noteworthy change to the list of the 10 biggest funds was that iShares’ iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) rose to ninth on the list. The $111.5 million in new money assets brought total assets to $14.37 billion, another reflection of the fear that entered markets in August.

The one ETF that dropped out of the top 10 in August compared with July was IWM, the iShares small-cap ETF. That’s little surprise, since IWM was on the top losers list. Smaller stocks often bear the brunt of selling pressures when markets turn fearful.

 

ETF Giants ($, Millions)
Ticker Name Issuer August Flows AUM at 8/31/2010 August Turnover
SPY SPDR S&P 500 SSgA -6,631.53 62,241.04 493,488.96
GLD SPDR Gold SSgA 815.09 52,158.80 25,616.52
EEM iShares MSCI Emerging Markets BlackRock 1,805.17 39,767.14 51,273.17
EFA iShares MSCI EAFE BlackRock -219.30 32,097.26 21,111.06
VWO Vanguard Emerging Markets Vanguard 1,946.15 30,348.94 10,973.73
IVV iShares S&P 500 BlackRock 2.55 20,905.61 7,097.05
TIP iShares Barclays TIPS Bond BlackRock -332.84 20,589.79 1,831.17
QQQQ PowerShares QQQ Invesco PowerShares -2,076.96 15,802.45 66,915.11
LQD iBoxx $ Investment Grade Corporate Bond BlackRock 111.50 14,370.44 2,753.86
VTI Vanguard Total Stock Market Vanguard 102.43 13,632.73 2,149.18

All the usual suspects remain on the IndexUniverse.com list of the most traded ETFs.

The top three were SPY, IWM and QQQQ, just as they were in July.

SPY had turnover of $493.49 billion, a drop from the $532 billion in July and consistent with reports that trading volumes in
U.S.
equity markets were unusually low in August.

IWM had $82.58 billion in turnover, compared with $98.40 billion in July, while the “Qs” had $66.92 billion compared with $81.49 billion the prior month.

Of note is that while VWO, the Vanguard emerging markets fund, continues to close the asset gap with its arch rival EEM from iShares, VWO has yet to appear among the top 10 on IndexUniverse.com’s “Liquidity Mavens” table.

EEM remains the more popular trading vehicle, with turnover in August of $51.27 billion compared with $56.58 billion in July.

 

Liquidity Mavens
Ticker Name Issuer August Flows AUM at 8/31/2010 August Turnover
SPY SPDR S&P 500 SSgA -6,631.53 62,241.04 493,488.96
IWM iShares Russell 2000 BlackRock -1,793.65 12,163.45 82,581.30
QQQQ PowerShares QQQ Invesco PowerShares -2,076.96 15,802.45 66,915.11
EEM iShares MSCI Emerging Markets BlackRock 1,805.17 39,767.14 51,273.17
GLD SPDR Gold SSgA 815.09 52,158.80 25,616.52
SDS ProShares UltraShort S&P500 ProShares 63.45 3,887.38 23,490.11
EWZ iShares MSCI Brazil BlackRock - 9,240.53 22,522.75
XLF Financial Select Sector SPDR SSgA -250.21 5,217.00 22,251.06
EFA iShares MSCI EAFE BlackRock -219.30 32,097.26 21,111.06
TLT iShares Barclays 20+ Year Treasury Bond BlackRock -426.54 3,194.99 17,347.31


August 2010 League Table
Issuer August Flows AUM at 8/31/2010
BlackRock (326) 379,846
SSgA (7,223) 189,274
Vanguard 3,682 113,346
Invesco PowerShares (1,856) 41,746
ProShares 1,246 25,808
Van Eck (83) 15,082
WisdomTree 220 6,854
Barclays Capital 743 7,290
Direxion 517 6,413
Rydex (66) 5,424
US Commodities Funds 312 4,559
Merrill Lynch (194) 4,208
Claymore 154 2,904
First Trust 54 2,545
JPMorgan Chase - 1,514
ETF Securities 168 1,781
Charles Schwab 69 1,425
PIMCO 203 1,414
ELEMENTS (13) 890
RevenueShares (9) 418
Global X 73 438
GreenHaven 28 295
UBS 12 259
IndexIQ 7 191
Xshares - 144
Fidelity - 134
Emerging Global Shares 3 113
Old Mutual (3) 75
Jefferies (2) 74
ALPS 2 69
Advisorshares 4 69
Goldman Sachs - 59
iShares 3 59
Credit Suisse 17 70
Grail Advisors 0 22
GlobalShares 2 16
Geary Advisors (7) 7
ALPS - 10
FaithShares - 10
U.S. One Trust - 5
Pax World - 2
Javelin 2 4
    814,866

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