ETFs kept on gathering new inflows in July, but jittery markets pulled assets lower.
U.S.-listed exchange-traded fund assets fell almost 1 percent last month even though investors poured more than $18 billion into ETFs, most of it equities. The happened because the S&P 500 Index fell by 1.3 percent in July on concerns global growth could be hurt by both the Federal Reserve raising interest rates and by geopolitical conflict in Ukraine and in Israel.
A number of inexpensive ETFs from Vanguard—the No. 3 ETF sponsor by assets—were among the most popular strategies, fueling the Malvern, Pa.-based firm's place as the biggest asset gatherer last month. A junk bond fund from iShares was the single least-popular ETF last month—a sign that investors are again growing anxious about the interest-rate outlook.
The market drop pulled total U.S.-listed ETF assets down to $1.847 trillion from $1.860 trillion at the end of June. However, ETF assets are 20 percent higher than at the end of July 2013, and 8.5 percent higher than at the end of last year, according to data compiled by ETF.com. Still, year-to-date asset gathering of $91 billion is shy of the same year-to-date asset haul of $114 billion in the first seven months of 2013.
The takeaway is this: While ETFs continue to grow in popularity as investors and advisors become more familiar with their trio of advantages—namely, cheapness, transparency and tradability—it doesn't look likely that last year's asset-gathering record of more than $188 billion will be eclipsed in 2014. Investors are growing wary about the widening conflict in Ukraine and the prospect of the Federal Reserve tightening ultra-loose monetary policy earlier than markets had been expecting.
July 2014 ETF Flows By Asset Class
|Net Flows ($M)||AUM ($M)||AUM|
|U.S. Fixed Income||-354.59||253,068.60||-0.14%|
|International Fixed Income||176.24||24,732.29||0.71%|
Asset Class Breakdown
Fixed-income ETFs had net outflows largely because of the sizable $1.7 billion in redemptions from the iShares iBoxx $ High Yield Corporate Bond ETF (HYG | B-69). Those outflows amounted to upward of 8 percent of the fund, which ended the month with $11.7 billion in assets.
On the flip side, commodities as an asset class pulled in almost $2 billion, as some of the bigger funds such as SPDR Gold Shares (GLD | A-100) and the PowerShares DB Commodity Tracking Fund (DBC | C-26) pulled in assets last month.
There's a growing sense that the China-slowdown-related commodities sell-off of the past few years has run its course, and that a reversion to the mean is in the cards. DBC, a futures-based fund that holds a multitude of different commodities, fell 4.75 percent last month, which helped pull year-to-date declines to 1.64 percent.
Emerging Markets Inflows
Last month's most popular fund was the SPDR S&P 500 ETF (SPY | A-98). It added $6.8 billion in July, and the world's biggest and most liquid ETF ended the month with total assets under management of almost $173 billion and total turnover in the month of more than $383 billion.
Right behind SPY in the No. 2 spot was the iShares MSCI Emerging Markets ETF (EEM | B-99), which gathered almost $1.9 billion.
In the third slot of the "Top Gainers" list was one of the Vanguard funds, the Vanguard FTSE Emerging Markets ETF (VWO | C-91). The world's biggest ETF canvassing equities in the entire developing world added $1.24 billion in new assets last month.
July 2014 Top Gainers
|SPY||SPDR S&P 500||SSgA||6,801.80||172,780.56||383,234.65|
|EEM||iShares MSCI Emerging Markets||BlackRock||1,898.14||42,506.82||40,273.64|
|VWO||Vanguard FTSE Emerging Markets||Vanguard||1,238.56||48,363.00||10,009.78|
|XLY||Consumer Discretionary Select SPDR||SSgA||829.93||5,810.09||9,824.50|
|QQQ||PowerShares QQQ||Invesco PowerShares||777.38||45,030.93||64,782.39|
|IVV||iShares Core S&P 500||BlackRock||766.82||57,749.73||16,633.64|
|VOO||Vanguard S&P 500||Vanguard||677.51||19,740.88||3,471.94|
|VNQI||Vanguard Global ex-U.S. Real Estate||Vanguard||635.67||2,164.69||775.15|
|EWJ||iShares MSCI Japan||BlackRock||608.75||15,182.62||6,355.22|
|XLK||Technology Select SPDR||SSgA||593.19||13,409.74||5,979.84|
July 2014 Biggest Losers
|HYG||iShares iBoxx $ High Yield Corporate Bond||BlackRock||-1,690.25||11,721.46||7,757.13|
|XLI||Industrial Select SPDR||SSgA||-1,397.21||8,785.91||12,078.88|
|IWM||iShares Russell 2000||BlackRock||-1,052.18||23,452.08||104,220.50|
|HYS||PIMCO 0-5 Year High Yield Corporate Bond||PIMCO||-742.99||4,305.30||1,920.56|
|IYJ||iShares U.S. Industrials||BlackRock||-727.89||959.21||2,339.92|
|XLE||Energy Select SPDR||SSgA||-727.30||11,526.46||18,758.27|
|EZU||iShares MSCI EMU||BlackRock||-701.89||10,042.98||4,673.72|
|XLP||Consumer Staples Select SPDR||SSgA||-664.94||5,752.45||7,062.19|
|XLF||Financial Select SPDR||SSgA||-635.90||17,745.99||13,883.71|
|DXJ||WisdomTree Japan Hedged Equity||WisdomTree||-625.03||10,116.21||4,414.23|
July 2014 League Table
|Issuer||Net Flows||AUM ($M)||% of AUM||Turnover|
|US Commodity Funds||316.02||2,324.21||13.60%||6,215.13|
|Emerging Global Shares||20.30||1,832.45||1.11%||224.42|
|Exchange Traded Concepts||78.38||1,588.95||4.93%||120.60|
|Highland Capital Management||5.95||203.84||2.92%||26.62|
|Arrow Investment Advisors||29.12||182.82||15.93%||48.03|
|Huntington Strategy Shares||-1.81||24.97||-7.23%||4.45|