Eurozone melting down? Buy lots of bond ETFs and call the doctor in the morning.
ETF investors poured money into fixed income last month, partly offsetting the effects of the 6.2 percent drop in U.S. stocks that was fueled by renewed concern Europe's problems risked polluting the entire global economy. Overall, flows into U.S.-listed ETF assets were $4.11 billion, but after the market's losses, assets fell about 5 percent to $1.137 trillion.
Seven of last month's most-popular ETFs were focused on fixed income, with total flows into U.S. and international bond funds totaling $7.46 billion and $834.3 million, respectively.
Investors are clearly worried that problems in debt-gorged Greece, Spain and Italy might bring down not only the eurozone as we know it, but also any glimmers of hope that the rest of the global economy might somehow dodge the bullet.
The Vanguard Total Bond Market ETF Fund (NYSEArca: BND) was last month's most popular ETF, pulling in $1.23 billion, and lifting its total assets to more than $17 billion. But Treasury ETFs were a big attraction too, which no doubt helped push yields on 10-year debt down to record lows of around 1.50 percent.
For example, the iShares Barclays 1-3 Year Treasury Bond Fund (NYSEArca: SHY) and the iShares Barclays 7-10 Year Treasury Bond Fund (NYSEArca: IEF) gathered $1.15 billion and $607.5 million, respectively, according to data compiled by IndexUniverse.
The success of Vanguard funds such as BND helped make the Valley Forge, Pa.-based company the most successful firm in terms of asset-gathering last month. Vanguard, the No. 3 U.S. ETF firm by assets, added almost $6.7 billion in assets.
Meanwhile, the Nos. 1 and 2 firms, San Francisco-based BlackRock unit iShares and Boston-based State Street Global Advisors, suffered outflows of $683.5 million and $1.78 billion, respectively.
| May 2012 Top Gainers ($, Millions) | |||||
| Ticker | Name | Issuer | May 2012 Flows | May 2012 AUM ($, M) |
May 2012 Turnover |
| BND | Vanguard Total Bond Market | Vanguard | 1,226.27 | 17,055.22 | 2,395.59 |
| SHY | iShares Barclays 1-3 Year Treasury Bond | BlackRock | 1,148.11 | 11,485.66 | 3,252.93 |
| VB | Vanguard Small-Cap | Vanguard | 959.67 | 4,986.59 | 609.32 |
| IEI | iShares Barclays 3-7 Year Treasury Bond | BlackRock | 759.01 | 3,118.09 | 1,340.20 |
| VOO | Vanguard S&P 500 | Vanguard | 644.39 | 4,410.59 | 1,324.90 |
| TIP | iShares Barclays TIPS Bond | BlackRock | 637.52 | 23,676.84 | 2,313.14 |
| LQD | iShares iBoxx $ Investment Grade Corporate Bond | BlackRock | 613.99 | 21,188.57 | 5,110.08 |
| IEF | iShares Barclays 7-10 Year Treasury Bond | BlackRock | 607.50 | 5,304.06 | 1,858.50 |
| VO | Vanguard Mid-Cap | Vanguard | 594.31 | 4,047.69 | 387.04 |
| TLT | iShares Barclays 20+ Year Treasury Bond | BlackRock | 586.78 | 3,786.52 | 24,815.54 |
| Flows By Asset Class And Total Flows | Net Flows ($, mm) | AUM ($, mm) | % of AUM |
| U.S. Equity | 1,288.87 | 517,954.13 | 0.25% |
| International Equity | - 3,387.88 | 251,902.42 | -1.34% |
| U.S. Fixed Income | 7,458.09 | 206,539.36 | 3.61% |
| International Fixed Income | 834.31 | 16,288.73 | 5.12% |
| Commodities | - 1,634.14 | 102,796.08 | -1.59% |
| Currency | - 63.44 | 3,089.37 | -2.05% |
| Leveraged | 1,127.44 | 12,362.63 | 9.12% |
| Inverse | - 1,134.78 | 19,683.01 | -5.77% |
| Asset Allocation | 71.68 | 1,849.39 | 3.88% |
| Alternatives | - 445.21 | 4,264.52 | -10.44% |
| Total: | 4,114.95 | 1,136,729.65 | 0.36% |
| May 2012 League Table | ||||
| Issuer | Net Flows | AUM ($M) | % of AUM | Turnover |
| BlackRock | - 683.54 | 468,551.07 | -0.15% | 378,775.94 |
| SSgA | - 1,782.90 | 277,953.78 | -0.64% | 774,197.48 |
| Vanguard | 6,695.81 | 200,608.65 | 3.34% | 47,152.69 |
| Invesco PowerShares | - 1,263.79 | 63,039.58 | -2.00% | 94,658.28 |
| Van Eck | 600.21 | 23,449.75 | 2.56% | 33,827.48 |
| ProShares | 103.26 | 22,259.27 | 0.46% | 79,694.50 |
| Guggenheim | - 66.45 | 8,768.01 | -0.76% | 2,022.76 |
| First Trust | - 32.36 | 7,358.38 | -0.44% | 2,087.98 |
| Barclays | - 787.12 | 6,786.01 | -11.60% | 25,956.05 |
| Charles Schwab | 74.29 | 6,416.94 | 1.16% | 1,241.06 |
| Direxion | 166.77 | 6,110.67 | 2.73% | 67,101.79 |
| PIMCO | 806.44 | 5,664.46 | 14.24% | 1,998.85 |
| JPMorgan Chase | 138.04 | 4,140.15 | 3.33% | 1,504.45 |
| ETF Securities | - 26.28 | 3,648.42 | -0.72% | 1,044.27 |
| ALPS | 218.20 | 3,309.63 | 6.59% | 737.08 |
| US Commodity Funds | - 21.33 | 2,677.11 | -0.80% | 11,639.93 |
| Rydex | - 28.20 | 2,113.39 | -1.33% | 5,418.82 |
| Global X | 61.46 | 1,185.76 | 5.18% | 495.44 |
| Merrill Lynch | - 49.85 | 1,127.05 | -4.42% | 254.60 |
| UBS | 26.21 | 1,007.95 | 2.60% | 210.96 |
| VelocityShares | - 178.17 | 912.36 | -19.53% | 6,699.53 |
| FlexShares | 108.32 | 854.88 | 12.67% | 137.53 |
| Emerging Global Shares | 20.24 | 642.93 | 3.15% | 174.49 |
| AdvisorShares | 48.69 | 567.80 | 8.58% | 441.37 |
| GreenHaven | - 60.73 | 493.14 | -12.32% | 122.67 |
| IndexIQ | 10.48 | 487.54 | 2.15% | 92.49 |
| RevenueShares | - 4.19 | 445.11 | -0.94% | 68.39 |
| Credit Suisse | 3.75 | 371.80 | 1.01% | 134.65 |
| Russell | - 16.56 | 295.43 | -5.61% | 104.93 |
| Deutsche Bank | - 4.75 | 158.05 | -3.00% | 28.72 |
| RBS Securities | 9.59 | 155.05 | 6.18% | 114.25 |
| Precidian | - 19.67 | 144.63 | -13.60% | 157.44 |
| FocusShares | 3.60 | 95.68 | 3.76% | 145.29 |
| Jefferies | - | 80.16 | 0.00% | 9.68 |
| Teucrium | - 12.55 | 77.11 | -16.27% | 39.70 |
| FFCM | 0.02 | 41.99 | 0.05% | 22.00 |
| Exchange Traded Concepts | 2.45 | 31.41 | 7.80% | 21.47 |
| Morgan Stanley | - | 27.99 | 0.00% | 1.58 |
| Columbia | 2.70 | 24.63 | 10.98% | 3.65 |
| Pax World | - | 17.82 | 0.00% | 2.79 |
| FactorShares | - | 16.07 | 0.00% | 11.75 |
| CitiGroup | - | 10.72 | 0.00% | 14.27 |
| ArrowShares | 3.68 | 3.46 | 106.42% | 3.96 |
| Fidelity | - | - | - | 36.43 |
| Goldman Sachs | - | - | - | 30.36 |
| WisdomTree | 49.14 | 14,597.83 | 0.34% | 3,782.83 |
Junk Bond Outflows
The powerful flows into bonds pointedly didn't include junk bond funds.
That's because high-yield debt is considered a relatively risky asset class, and investors often move out of riskier assets when markets are roiled.
The SPDR Barclays Capital High Yield Bond ETF (NYSEArca: JNK) suffered outflows of $1.17 billion, making it the No. 2 fund on IndexUniverse's "Biggest Losers" table.
The iShares iBoxx $ High Yield Corporate Bond Fund (NYSEArca: HYG) was No. 9, with redemptions of $522.1 million.
At the top of the outflows list was the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM), which bled $1.54 billion in assets, a fitting place considering emerging markets, like junk bonds, strongly reflect investors' appetite for risk.
The Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) lost just $622.4 million in assets, or about 40 percent of EEM's outflows. It's the latest sign that VWO, the cheaper of the two virtually identical funds, is cementing its reputation as the bigger and more popular of the two—at least among buy-and-hold investors.
| May 2012 Biggest Losers ($, Millions) | |||||
| Ticker | Name | Issuer | May 2012 Flows |
May 2012 AUM ($, M) |
May 2012 Turnover |
| EEM | iShares MSCI Emerging Markets | BlackRock | - 1,537.45 | 32,675.05 | 54,508.80 |
| JNK | SPDR Barclays Capital High Yield Bond | SSgA | - 1,166.59 | 10,526.05 | 6,039.15 |
| IWM | iShares Russell 2000 | BlackRock | - 1,077.43 | 13,578.75 | 100,616.61 |
| QQQ | PowerShares QQQ | Invesco PowerShares | - 867.21 | 29,460.74 | 84,703.16 |
| XLF | Financial Select SPDR | SSgA | - 781.60 | 5,526.28 | 29,271.09 |
| XLE | Energy Select SPDR | SSgA | - 702.62 | 6,291.05 | 25,683.31 |
| VWO | Vanguard MSCI Emerging Markets | Vanguard | - 622.40 | 47,314.59 | 21,990.90 |
| AAXJ | iShares MSCI All Country Asia ex-Japan | BlackRock | - 606.35 | 1,660.19 | 1,212.53 |
| HYG | iShares iBoxx $ High Yield Corporate Bond | BlackRock | - 522.06 | 14,168.56 | 8,001.76 |
| VXX | iPath S&P 500 VIX Short-Term Futures ETN | Barclays | - 455.04 | 1,848.70 | 23,625.34 |
Vanguard Head-Fake
Flows into U.S. equities were meanwhile $1.29 billion, though it's probably safe to say that that figure is a bit iffy.
That's because a number of Vanguard equity funds were among the top creations last month, and the company is known to do monthly rebalancings at the end of one month and the beginning of another. That pretty much indicates that some of its equity flows shouldn't be taken at face value.
Getting a more reliable sense of how equities fared last month means looking at outflows from EEM, VWO and the $867.2 million that moved out of a big fund like the PowerShares QQQ Trust (NasdaqGM: QQQ).
Overall, $3.39 billion moved out of international equity funds last month—a good indication of how investors have begun to hunker down as the eurozone's problems continue to play out.
| May 2012 ETF Giants ($, Millions) | |||||
| Ticker | Name | Issuer | May 2012 Flows | May 2012 AUM ($, M) |
May 2012 Turnover |
| SPY | SPDR S&P 500 | SSgA | - 390.99 | 96,643.50 | 555,885.94 |
| GLD | SPDR Gold | SSgA | - 397.14 | 63,604.94 | 40,329.01 |
| VWO | Vanguard MSCI Emerging Markets | Vanguard | - 622.40 | 47,314.59 | 21,990.90 |
| EFA | iShares MSCI EAFE | BlackRock | 517.92 | 32,822.13 | 24,953.98 |
| EEM | iShares MSCI Emerging Markets | BlackRock | - 1,537.45 | 32,675.05 | 54,508.80 |
| QQQ | PowerShares QQQ | Invesco PowerShares | - 867.21 | 29,460.74 | 84,703.16 |
| IVV | iShares S&P 500 | BlackRock | - 87.58 | 28,323.52 | 10,964.14 |
| TIP | iShares Barclays TIPS Bond | BlackRock | 637.52 | 23,676.84 | 2,313.14 |
| LQD | iShares iBoxx $ Investment Grade Corporate Bond | BlackRock | 613.99 | 21,188.57 | 5,110.08 |
| VTI | Vanguard Total Stock Market | Vanguard | 28.49 | 20,300.70 | 2,810.14 |
| May 2012 Liquidity Mavens | |||||
| Ticker | Name | Issuer | May 2012 Flows | May 2012 AUM ($, M) |
May 2012 Turnover |
| SPY | SPDR S&P 500 | SSgA | - 390.99 | 96,643.50 | 555,885.94 |
| IWM | iShares Russell 2000 | BlackRock | - 1,077.43 | 13,578.75 | 100,616.61 |
| QQQ | PowerShares QQQ | Invesco PowerShares | - 867.21 | 29,460.74 | 84,703.16 |
| EEM | iShares MSCI Emerging Markets | BlackRock | - 1,537.45 | 32,675.05 | 54,508.80 |
| GLD | SPDR Gold | SSgA | - 397.14 | 63,604.94 | 40,329.01 |
| XLF | Financial Select SPDR | SSgA | - 781.60 | 5,526.28 | 29,271.09 |
| XLE | Energy Select SPDR | SSgA | - 702.62 | 6,291.05 | 25,683.31 |
| EFA | iShares MSCI EAFE | BlackRock | 517.92 | 32,822.13 | 24,953.98 |
| EWZ | iShares MSCI Brazil | BlackRock | - 221.42 | 7,195.34 | 24,840.89 |
| TLT | iShares Barclays 20+ Year Treasury Bond | BlackRock | 586.78 | 3,786.52 | 24,815.54 |
