Drop In Yields Fuels Bond ETF Inflows In May

June 02, 2014

Bond ETFs and European equities loomed large, as inflation fears waned and deflation fears flared.

Investors moved into international equities and into Treasurys last month, as the uneven recovery of the past five years characterized by slow growth, and on-again/off-again concern about inflationary pressures continued to rear its head.

In total, almost $13 billion flowed into ETFs in May, lifting total U.S.-listed assets to $1.804 trillion—2.4 percent higher than at the end of April, and 20 percent higher than at the end of the same year-earlier period, according to data compiled by ETF.com Analytics. International equities and fixed income were, as noted, bright spots, though net flows were negative out of U.S. equities.

ETF assets have risen 6 percent this year, helped in part by rising stock markets, including a more than 4 percent rise for the S&P 500 Index. In sum, May flows paint the picture of robust asset gathering amid signs that investors of all stripes are waking up to the fact that cheap, transparent and liquid ETFs are the most efficient way to implement either passive or active asset allocation.

That said, ETF asset-gathering is well off its record pace in 2013. So far in 2014, investors have plowed slightly more than $48 billion into U.S.-listed ETFs compared with more than $84 billion in the same year-earlier period. By the end of the last year, ETF asset gathering had reached $188.54 billion, a record in the 21-year history of the U.S. ETF industry.

May 2014 Top Gainers

  Net Flows ($, M) AUM ($, M) % of AUM
U.S. Equity -3754.22 970,232.47 -0.39%
International Equity 6,570.06 436,035.72 1.51%
U.S. Fixed Income 8,938.71 257,643.46 3.47%
International Fixed Income 496.48 23,706.77 2.09%
Commodities 42.26 64,460.92 0.07%
Currency -29.69 1,726.14 -1.72%
Leveraged -699.10 21,561.68 -3.24%
Inverse 845.00 20,562.99 4.11%
Asset Allocation 225.67 4,722.55 4.78%
Alternatives 179.72 3,024.24 5.94%
Total: 12,814.91 1,803,676.93 0.71%

Low Inflation And Fear Of Deflation

The single most popular fund last month was the iShares 7-10 Year Treasury Bond ETF (IEF | A-51), which gathered more than $5 billion. It was a fitting data point considering yields on benchmark 10-year Treasury notes dropped to 2.46 percent from 2.59 percent at the end of the April. IEF’s price, which moves in the opposite direction of its yield, rose more than 1.5 percent in May.

At the same time, international equities—developed markets and emerging markets alike—pulled in almost as many assets as U.S. fixed income. The most popular equity strategy was the iShares MSCI Emerging Markets ETF (EEM | B-99), which added $881 million in fresh money.

Europe, too, was a popular destination, as investors positioned themselves for a June 5 European Central Bank (ECB) meeting at which the ECB is likely to combat the risk of deflation in the eurozone by loosening monetary policy, possibly by launching a round of quantitative easing.

 


May 2014 Top Gainers

Ticker Name Issuer Flows AUM ($, M) Turnover
IEF iShares 7-10 Year Treasury Bond BlackRock 5,211.06 9,834.62 7,493.08
UST ProShares Ultra 7-10 Year Treasury ProShares 1,868.06 1,931.79 2,208.35
EEM iShares MSCI Emerging Markets BlackRock 880.97 37,988.64 46,539.63
VEA Vanguard FTSE Developed Markets Vanguard 819.16 22,911.02 2,496.27
IYR iShares U.S. Real Estate BlackRock 818.73 5,501.44 14,115.23
QQQ PowerShares QQQ Invesco PowerShares 756.04 43,383.22 71,571.58
VGK Vanguard FTSE Europe Vanguard 754.13 17,302.76 3,791.95
EZU iShares MSCI EMU BlackRock 648.84 11,681.18 3,651.38
VNQ Vanguard REIT Vanguard 637.70 23,051.75 4,534.23
XLE Energy Select SPDR SSgA 516.36 11,359.52 15,491.80

May 2014 Biggest Losers

Ticker Fund Issuer Flows AUM ($, M) Turnover
SPY SPDR S&P 500 SSgA - 4,029.09 160,160.40 347,416.02
IWM iShares Russell 2000 BlackRock - 3,829.36 23,216.30 126,467.29
UWM ProShares Ultra Russell 2000 ProShares - 1,434.74 211.29 2,385.19
SSO ProShares Ultra S&P 500 ProShares - 1,022.13 2,389.53 10,067.97
IVV iShares Core S&P 500 BlackRock - 931.72 56,811.79 12,696.75
XLF Financial Select SPDR SSgA - 711.44 17,939.28 12,988.55
XLK Technology Select SPDR SSgA - 670.12 12,646.65 4,156.63
XLU Utilities Select SPDR SSgA - 559.00 5,817.19 11,508.18
XLV Health Care Select SPDR SSgA - 414.85 9,466.41 6,885.05
EWJ iShares MSCI Japan BlackRock - 397.61 13,604.82 6,210.39.

Apart from the Vanguard FTSE Developed Markets ETF (VEA | A-91) pulling in $819 million last month, the Vanguard FTSE Europe ETF (VGK) added $754 million in new assets and the eurozone-focused iShares MSCI EMU ETF (EZU | A-65) garnered $649 million

I Cry For SPY

The one asset class with conspicuous outflows was U.S. equities, with a plethora of S&P 500-related ETF strategies populating ETF.com’s “Biggest Losers” table last month. The SPDR S&P 500 ETF (SPY | A-97) was the least popular exchange-traded fund in May, with its redemptions of $4 billion.

Small-caps have been under pressure this year amid sentiment that expected returns are relatively depleted compared with larger-cap equities. May flows out of the iShares Russell 2000 ETF (IWM | A-83) totaled $3.8 billion, and the ETF is 2 percent in the red this year compared with SPY’s gains through May of more than 4 percent.

Finally, gold remained under pressure amid $102 million in flows out of SPDR Gold Shares (GLD | A-100), the world’s biggest gold bullion ETF. Year-to-date redemptions from GLD now total $464 million, according to our data. The fund, which has $31.5 billion in assets under management, is the No. 8 U.S. ETF by assets.

 

 

 


May 2014 League Table

Issuer Net Flows AUM ($, M) % of AUM Turnover
BlackRock 7,342.69 702,265.20 1.05% 384,272.66
SSgA - 5,213.41 386,278.46 -1.35% 489,059.68
Vanguard 5,087.52 371,788.02 1.37% 48,380.54
Invesco PowerShares 782.78 99,932.76 0.78% 80,790.37
WisdomTree 104.15 34,324.44 0.30% 8,744.02
ProShares 262.49 27,324.48 0.96% 65,928.63
Guggenheim 745.42 26,186.75 2.85% 5,921.89
First Trust 1,039.64 25,936.52 4.01% 4,583.38
Van Eck 310.32 23,361.31 1.33% 22,586.52
Charles Schwab 502.83 20,512.40 2.45% 2,400.37
PIMCO 222.10 14,996.19 1.48% 2,517.05
ALPS 379.24 10,446.59 3.63% 1,438.69
Barclays Capital 304.14 8,598.35 3.54% 20,701.19
Northern Trust 117.50 8,049.11 1.46% 390.61
Direxion 119.67 7,344.62 1.63% 40,276.14
JPMorgan - 6,218.74 0.00% 884.18
UBS 98.68 4,901.73 2.01% 712.11
Global X 104.19 3,675.09 2.83% 1,005.53
ETF Securities - 16.49 2,957.75 -0.56% 287.31
US Commodity Funds - 62.66 2,001.92 -3.13% 5,125.27
AdvisorShares 129.19 1,852.56 6.97% 461.70
Deutsche Bank 163.32 1,731.69 9.43% 414.58
Emerging Global Shares 41.64 1,675.95 2.48% 229.70
VelocityShares - 213.97 1,571.83 -13.61% 7,889.25
Exchange Traded Concepts 59.86 1,425.71 4.20% 195.76
Merrill Lynch 4.21 1,331.65 0.32% 126.94
Fidelity 222.91 1,301.43 17.13% 468.46
Credit Suisse 29.27 1,244.72 2.35% 141.10
IndexIQ 32.65 1,062.78 3.07% 133.49
RevenueShares 11.84 791.82 1.50% 86.40
RBS Securities 0.90 627.49 0.14% 90.30
GreenHaven 8.51 355.54 2.39% 32.28
Cambria 21.79 319.94 6.81% 80.52
Goldman Sachs - 261.90 0.00% 5.13
Highland Capital Management 41.92 211.05 19.86% 65.44
Arrow Investment Advisors 14.47 145.16 9.97% 44.53
Precidian - 120.59 0.00% 80.16
Teucrium - 14.02 110.82 -12.65% 92.62
KraneShares - 6.18 76.16 -8.11% 44.29
Morgan Stanley - 66.43 0.00% 2.31
CitiGroup - 65.08 0.00% 7.56
Horizons - 37.32 0.00% 22.63
Columbia - 32.14 0.00% 6.49
Huntington Strategy Shares - 2.62 27.65 -9.47% 81.30
Russell - 9.25 0.00% 1.91
FFCM - 2.94 7.84 -37.46% 10.76
LocalShares - 6.69 0.00% 4.08
Factor Advisor - 0.01 5.58 -0.23% 1.48
Jefferies - - - -
Pax World - - - -

 

 

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