ETF assets reached a record in February as markets rediscovered their post-crash appetite for risk assets.
Investors poured more than $19 billion into ETFs last month, as investment markets pivoted midmonth from a “risk-off” flavor early on to a return of the “risk-on” sentiment that has favored stocks since the market recovery from the crash of 2008 first began.
Total U.S.-listed ETF assets reached a record $1.727 trillion, or more than 5 percent higher than in January, and more than 21 percent higher than at the end of the same year-earlier period, according to data compiled by ETF.com Analytics. Most of the $19.45 billion in inflows was into bonds, and physical gold funds gathered assets as well. But equities also managed to pull in assets after the tide had turned.
The S&P 500 Index began February with a continuation of its January swoon. But once sentiment changed, the S&P 500 retraced losses and finished the month 4.5 percent higher and at a record high, helping pump up ETF assets along with the net inflows.
That shift in sentiment was linked in part to comments by new Federal Reserve Chair Janet Yellen a bit more than a week into February that the central bank remained committed to “tapering” five years of “quantitative easing.” The declaration seemed enough to end a correction that began to take shape early this year amid concern global growth and a recovery in the U.S. jobs market was faltering.
Apart from the quite-sudden shift in markets, the flows and asset record demonstrate the growing popularity of ETFs. Investors are using ETFs more and more, valuing them for the cheap, transparent and efficient ways they afford access to pockets narrow and wide of the investment universe. In fact, flows into and out of ETFs have become one of the more reliable ways to read the tea leaves in markets.
|Flows By Asset Class Feb. 2014 ($,M)||Net Flows||AUM||% of AUM|
|U.S. Fixed Income||13,803.37||247,222.87||5.58%|
|International Fixed Income||329.62||21,246.97||1.55%|
The first and biggest ETF, the SPDR S&P 500 ETF (SPY | A-97) bled about $2.8 billion in assets in February. But equities as an asset class eked out net inflows of $3.5 billion, including $1.7 billion in U.S. stocks. The shift from outflows to inflows for SPY and equities in general is evident in ETF.com’s weekly flows data in February. SPY has $158 billion in assets, or 9 percent of the $1.727 trillion grand total.
From an individual fund perspective, the lion’s share of inflows were concentrated on fixed-income strategies, a vestige of the sizable inflows early in the month based on a “risk-off” sentiment that had returned to markets in January. But as the tide shifted and began favoring stocks over bonds, fixed-income flows merely slowed, but didn’t reverse.
By the end of the month, fixed income as a whole hauled in more than $14 billion in fresh assets, $13.8 billion of which was invested in different pocket of the U.S. bond market. The three most popular ETFs last month were all fixed-income funds. Those ETFs include:
- iShares 3-7 Year Treasury Bond ETF (IEI | A-74), inflows of $3.7 billion, and month-end assets of $6.3 billion
- iShares 1-3 Year Treasury Bond ETF (SHY | A-97), inflows of $3.54 billion, and month-end assets of $11.75 billion
- ProShares Ultra 7-10 Year Treasury ETF (UST), a double-exposure leverage fund with notoriously “hot” assets, pulled in $2.92 billion and ended February with $2.95 billion
SPDR Gold Shares (GLD | A-100), the world’s biggest physical bullion ETF, pulled in more than $2 billion in February, its first positive flows in months that reflected the return of economic anxiety early in the month.
Conversely, the least popular ETFs last month were all focused on equities, notwithstanding the fact that equities as an asset class—again—ended up with net inflows by the end of the month.
|Top Gainers Feb. 2014 ($,M)|
|IEI||iShares 3-7 Year Treasury Bond||BlackRock||3,724.07||6,313.12||5,292.79|
|SHY||iShares 1-3 Year Treasury Bond||BlackRock||3,542.14||11,752.45||7,096.21|
|UST||ProShares Ultra 7-10 Year Treasury||ProShares||2,921.81||2,950.85||4,317.36|
|QQQ||PowerShares QQQ||Invesco PowerShares||1,748.21||46,704.66||66,319.58|
|IWM||iShares Russell 2000||BlackRock||1,516.37||27,211.76||100,213.66|
|CSJ||iShares 1-3 Year Credit Bond||BlackRock||1,169.75||13,225.42||2,434.73|
|LQD||iShares iBoxx $ Investment Grade Corporate Bond||BlackRock||949.72||16,897.69||3,535.15|
|MDY||SPDR S&P MidCap 400||SSgA||920.75||15,960.77||17,685.66|
|XLF||Financial Select SPDR||SSgA||764.29||17,190.40||18,986.54|
|Biggest Losers Feb. 2014 ($,M)|
|IJH||iShares Core S&P Mid-Cap||BlackRock||- 2,946.88||20,652.72||6,565.04|
|IVV||iShares Core S&P 500||BlackRock||- 2,837.45||49,911.33||21,301.74|
|SPY||SPDR S&P 500||SSgA||- 2,821.02||158,175.35||451,182.30|
|EEM||iShares MSCI Emerging Markets||BlackRock||- 2,081.33||30,907.26||62,514.57|
|SSO||ProShares Ultra S&P 500||ProShares||- 1,638.37||1,619.44||16,238.50|
|XLK||Technology Select SPDR||SSgA||- 1,561.70||12,138.54||5,895.59|
|MVV||ProShares Ultra MidCap 400||ProShares||- 1,533.42||163.72||2,155.83|
|XLY||Consumer Discretionary Select SPDR||SSgA||- 943.68||5,410.13||8,852.95|
|XLP||Consumer Staples Select SPDR||SSgA||- 872.93||5,603.65||7,369.12|
|VIG||Vanguard Dividend Appreciation||Vanguard||- 661.12||18,712.82||2,008.78|
|Feb 2014 League Table ($,M)|
|Issuer||Net Flows||AUM||% of AUM||Turnover|
|Barclays Capital||- 115.02||7,840.35||-1.47%||37,665.69|
|US Commodity Funds||12.12||2,212.65||0.55%||15,918.49|
|Emerging Global Shares||-28.33||1,440.46||-1.97%||305.06|
|Exchange Traded Concepts||76.53||1,156.63||6.62%||150.68|
|Highland Capital Management||9.96||139.44||7.14%||22.85|
|Arrow Investment Advisors||1.97||99.34||1.98%||28.85|
|Huntington Strategy Shares||31.08||0.00%||489.64|