Midyear ETF Flows Set New Record Of $101B

July 01, 2015

International equities, and currency-hedged strategies in particular, dominated ETF inflows in the first half of 2015. Net inflows totaled a record $101 billion, and total U.S.-listed ETF assets stood at $2.118 trillion at the end of June—6 percent higher than at the end of 2014, and 14 percent higher than a year ago.

Currency hedging has been all the rage, as we’ve writing about all year, with the most popular ETF being the eurozone-focused WisdomTree Europe Hedged Equity Fund (HEDJ | B-45). HEDJ has pulled in almost $14 billion so far this year, lifting its assets to nearly $20 billion, according to data compiled by ETF.com.

For U.S. investors grappling with dollar strength, funds like HEDJ have protected solid returns, up more than 14 percent this year. Without that currency hedge that peels out euro weakness, a fund with HEDJ’s holdings would have returned less than 6 percent. HEDJ is also far outperforming the U.S. broad market: The SPDR S&P 500 (SPY | A-98) is barely above zero through June 30.

2015 First Half Flows By Asset

Net Flows ($M) AUM ($M) % of AUM
U.S. Equity -17,666.49 1,155,775.66 -1.53%
International Equity 90,161.54 525,646.59 17.15%
U.S. Fixed Income 20,130.83 300,073.34 6.71%
International Fixed Income 3,109.47 26,331.49 11.81%
Commodities 1,106.70 55,730.56 1.99%
Currency 226.73 1,482.61 15.29%
Leveraged 979.32 24,360.84 4.02%
Inverse 1,375.87 19,037.82 7.23%
Asset Allocation 839.48 5,874.78 14.29%
Alternatives 1,110.57 3,702.98 29.99%
Total 101,374.01 2,118,016.67 4.79%

2015 First Half Top Gainers

Ticker Fund Issuer Flows AUM ($M) Turnover
HEDJ WisdomTree Europe Hedged Equity WisdomTree 13,969.81 19,765.15 44,687.00
DBEF Deutsche X-trackers MSCI EAFE Hedged Equity ETF Deutsche Bank 10,456.74 12,153.98 16,993.59
EFA iShares MSCI EAFE BlackRock 5,884.69 60,941.33 155,826.69
VTI Vanguard Total Stock Market Vanguard 4,770.37 56,151.79 37,947.94
VOO Vanguard S&P 500 Vanguard 4,671.37 32,281.71 40,502.27
DXJ WisdomTree Japan Hedged Equity WisdomTree 4,180.81 18,153.86 37,841.97
EWJ iShares MSCI Japan BlackRock 3,239.88 19,591.27 49,861.20
VGK Vanguard FTSE Europe Vanguard 2,777.32 14,242.75 36,627.96
EWG iShares MSCI Germany BlackRock 2,707.50 7,178.74 21,649.57
HEFA iShares Currency Hedged MSCI EAFE BlackRock 2,659.03 2,719.08 4,831.87

Into International, Out Of US

In sum, ETFs focused on international equities gathered more than $90 billion, while those targeting U.S. equities bled almost $18 billion.

That divergence is the latest evidence that a big asset-flow shift is taking place this year. Investors are clearly moving out of the U.S., which led the global economy out of the financial crisis since the market bottomed on March 9, 2009.

Instead, investors are placing hopes on areas like Europe, where growth is returning and central banks are still pursuing ultra-easy monetary policies.

Twenty-two years after the launch of the now-$177 billion SPY—the first U.S.-listed exchange-traded fund—the world of ETFs is steadily coming out of the shadows and onto center stage of global investment markets. Global ETF assets now almost match the $3 trillion in hedge funds and, on the horizon, it’s no longer folly to imagine a world in which ETF assets exceed the more than $16 trillion now invested in open-end mutual funds.

Outflows From US Equities

SPY, by the way, was the least popular ETF in the first half of 2015, suffering outflows of more than $45 billion—making it the main reason U.S. equities as a whole had almost $18 billion in redemptions. SPY was also at the top of the “Biggest Outflows” tables of June and second-quarter flows.

SPY, which occupies a unique place in the ETF firmament as both a trading tool and a long-term holding for buy-and-hold investors, is something of a canary in the coal mine in the so-called ETF ecosystem. As such, the world’s biggest ETF was also the least popular fund in the first quarter, the second quarter and in the month of June.

Beyond SPY, nine of the 10 funds on our biggest outflows list were U.S.-focused equity funds. Those included many of the biggest and most popular funds, such as SPY’s sibling, the iShares Core S&P 500 ETF (IVV | A-99). Also on the top redemptions list were the Nasdaq-100 ETF, the PowerShares QQQ Trust (QQQ | A-65) as well as a slew of U.S. sector funds, including the Financial Select Sector SPDR Fund (XLF | A-89).


2015 First Half Biggest Losers

Ticker Fund Issuer Flows AUM ($M) Turnover
SPY SPDR S&P 500 SSgA -45,178.88 170,512.09 3,088,026.74
EEM iShares MSCI Emerging Markets BlackRock -3,471.54 29,120.14 259,777.71
IVV iShares Core S&P 500 BlackRock -3,138.04 67,763.66 103,480.01
QQQ PowerShares QQQ Invesco PowerShares -2,967.93 38,792.24 395,005.81
XLP Consumer Staples Select SPDR SSgA -2,614.75 7,209.94 46,735.77
XLF Financial Select SPDR SSgA -2,046.39 18,834.93 99,431.03
DIA SPDR Dow Jones Industrial Average Trust SSgA -1,914.98 11,036.56 123,552.38
XLI Industrial Select SPDR SSgA -1,696.23 7,211.46 64,517.32
IWM iShares Russell 2000 BlackRock -1,683.04 29,527.21 473,150.36
IYW iShares U.S. Technology BlackRock -1,675.89 2,985.19 6,491.85

End Of A Trend?

Conversely, as noted, currency-hedged strategies like WisdomTree’s HEDJ and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF | B-63) have consistently been among the most popular funds in the first quarter, the second quarter and in the month of June.

That said, it’s worth noting that in June, both DBEF and HEDJ were toward the bottom of the Top 10 inflows list—they have been at the top of the inflows lists in the first several months of 2015—suggesting the currency-hedging trend, if not the shift into international equities, may be starting to cool off.

2015 First Half League Table

Issuer Net Flows AUM ($M) % of AUM Turnover
BlackRock 41,724.90 809,759.82 5.15% 2,455,084.83
Vanguard 40,509.61 469,939.62 8.62% 454,208.61
SSgA -44,215.96 409,617.78 -10.79% 4,346,208.52
Invesco PowerShares -678.48 97,442.41 -0.70% 464,089.72
WisdomTree 19,837.45 61,284.93 32.37% 114,788.42
First Trust 9,037.37 43,346.59 20.85% 50,589.26
Charles Schwab 7,110.06 34,252.75 20.76% 28,901.77
Guggenheim 2,558.56 31,086.74 8.23% 49,057.43
ProShares 276.76 25,351.91 1.09% 436,528.20
Van Eck 2,326.15 22,681.11 10.26% 250,439.03
Deutsche Bank 13,317.17 18,619.48 71.52% 38,957.98
ALPS 846.86 11,352.06 7.46% 12,332.49
PIMCO -286.11 11,319.74 -2.53% 16,033.37
Barclays Capital 791.03 9,168.31 8.63% 160,087.27
Direxion 1,180.41 9,120.48 12.94% 253,133.70
Northern Trust 192.01 8,862.03 2.17% 3,544.69
UBS 809.85 5,470.56 14.80% 5,701.83
JPMorgan 134.76 5,114.26 2.64% 7,343.83
Global X 509.56 3,989.17 12.77% 5,857.04
US Commodity Funds 764.88 3,810.13 20.07% 84,882.31
Fidelity 756.02 3,538.20 21.37% 5,942.48
VelocityShares 809.74 2,902.73 27.90% 149,613.57
Exchange Traded Concepts 355.08 2,461.56 14.43% 1,183.30
ETF Securities -105.55 2,268.14 -4.65% 1,700.77
Credit Suisse 69.38 1,785.95 3.88% 987.18
Emerging Global Shares -121.51 1,518.67 -8.00% 1,591.42
IndexIQ 88.47 1,424.60 6.21% 1,108.76
AdvisorShares 76.23 1,318.94 5.78% 1,408.26
Factor Advisor 1,030.00 1,210.49 85.09% 2,639.15
RevenueShares 138.33 1,097.62 12.60% 642.68
Merrill Lynch 4.66 855.86 0.54% 664.55
RBS Securities 58.56 812.84 7.20% 798.19
Cambria 73.36 426.15 17.22% 377.50
Highland Capital Management 33.40 344.03 9.71% 218.02
GreenHaven 21.62 280.28 7.71% 201.97
CitiGroup 101.79 266.25 38.23% 100.28
Arrow Investment Advisors 87.60 232.59 37.66% 273.41
KraneShares -118.33 188.69 -62.71% 940.13
Goldman Sachs - 164.20 0.00% 238.87
Teucrium -12.37 131.84 -9.38% 410.88
Morgan Stanley - 90.79 0.00% 42.89
Horizons 43.89 80.05 54.83% 114.27
Precidian -28.60 68.32 -41.86% 297.82
Columbia 4.72 40.62 11.62% 32.68
FFCM 4.96 13.74 36.08% 43.71
Huntington Strategy Shares -5.73 13.19 -43.40% 19.41
LocalShares 1.54 11.60 13.27% 3.97
Jefferies - - - -
Pax World - - - -
Russell - - - -



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