Currency-hedged ETFs, led by the WisdomTree Europe Hedged Equity Fund (HEDJ | B-59), drove more than a third of the nearly $59 billion that flowed into ETFs in the first quarter of 2015. The more than $20 billion in flows linked to that currency-hedged ETF topped inflows of $15 billion in the first quarter of 2014.
Total ETF assets ended the quarter at $2.097 trillion, just shy of an all-time record, almost 5 percent higher than at the end of 2014, and more than 20 percent higher than a year ago, according to data compiled by ETF.com. The S&P 500 Index is about flat on the year.
Four of the 10 most popular ETFs in the first quarter were currency-hedged, a reflection of the fact that central bankers in Japan and especially the eurozone are engaged in currency-weakening quantitative easing, while the Federal Reserve in the U.S. is preparing the market for its first rate hike in nine years.
Those currency-hedged strategies and their first-quarter flows are as follows:
- WisdomTree Europe Hedged Equity Fund (HEDJ | B-59), $10.14 billion
- Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF | B-77), $5.11 billion
- WisdomTree Japan Hedged Equity Fund (DXJ | B-69), $2.48 billion
- iShares Currency Hedged MSCI EAFE ETF (HEFA | D-47), $1.99 billion
The $58.82 billion in total first-quarter inflows puts this year's asset gathering on track to top the $243 billion that flowed into U.S. ETFs in all of 2014. That's likely to be the case because flows into ETFs have historically accelerated as each year unfolds, with fourth-quarter asset gathering the most robust of all.
March flows, in some ways, were quite similar to first-quarter flows in terms of the prevalence of currency-hedged strategies among the most popular funds. HEDJ from WisdomTree and DBEF from Deutsche were the Nos. 1 and 2 ETFs in both March and the entire first quarter.
HEDJ, which won "ETF of the Year" at ETF.com's awards earlier this month, gathered $4.81 billion in March. DBEF, which is a currency-hedged fund based on the MSCI EAFE Index that targets developed-world equities outside of the U.S. and Canada, added $2.42 billion in the month of March. Asset gathering in March totaled more than $28 billion, or nearly half of first-quarter asset gathering.
|Flows Q1 2015|
|Asset Class||Net Flows ($,M)||AUM ($M)||% of AUM|
|U.S. Fixed Income||20,278.02||306,662.91||6.61%|
|International Fixed Income||1,060.30||24,764.26||4.28%|
|Top Gainers Q1 2015|
|Ticker||Fund||Issuer||Flows ($M)||AUM ($M)||Turnover|
|HEDJ||WisdomTree Europe Hedged Equity||WisdomTree||10,141.71||17,313.78||22,382.36|
|DBEF||Deutsche X-trackers MSCI EAFE Hedged Equity ETF||Deutsche Bank||5,109.65||7,235.47||8,018.95|
|VTI||Vanguard Total Stock Market||Vanguard||3,180.65||54,752.31||20,703.77|
|VOO||Vanguard S&P 500||Vanguard||2,971.29||30,637.03||22,959.84|
|LQD||iShares iBoxx $ Investment Grade Corporate Bond||BlackRock||2,728.93||22,417.51||19,319.74|
|DXJ||WisdomTree Japan Hedged Equity||WisdomTree||2,482.31||15,782.49||18,712.83|
|HYG||iShares iBoxx $ High Yield Corporate Bond||BlackRock||2,149.82||16,711.84||39,471.40|
|IEFA||iShares Core MSCI EAFE||BlackRock||2,034.02||5,418.03||4,306.25|
|HEFA||iShares Currency Hedged MSCI EAFE||BlackRock||1,991.48||2,123.69||2,362.75|
|USO||United States Oil||US Commodity Funds||1,763.62||2,792.28||39,175.59|