Sept. ETF Flows: US Equities Lead Creations

October 01, 2010

Inflows came from across almost all asset classes, lifting money in U.S. ETFs to over $900 billion.

Investors of all stripes, whether focused on stocks, bonds or commodities, poured more than $27 billion into U.S. ETFs in September, lifting assets by more than 10 percent to over $900 billion. The flow highlighed the ways investors are grappling with the sluggishness the world’s biggest economy finds itself mired in.

Equity creations of more than $24 billion made up the lion’s share of new assets last month, with the SPDR S&P 500 ETF (NYSEArca: SPY) raking in $10.28 billion. SPY’s haul was more than half of
U.S.
equity creations and over 40 percent of all the inflows into stock ETFs, including emerging markets funds, which continued to do well, according to data compiled by IndexUniverse.com.

It isn’t unusual to see SPY dominate asset gathering, as it is the world’s biggest ETF, but its inflows also indicated the extent to which investors are favoring large-cap stocks at a time of uncertainly in the global economy. Many of the companies in the S&P 500 have a large percentage of their operations outside the
U.S.
, offering diversification, and they also pay steady dividends, giving their stocks bondlike qualities.

Net fixed-income inflows meanwhile totaled about $2 billion, and those into commodities ETFs, particularly precious metals ETFs, were $1.01 billion.

 

Flows By Asset Class Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity 18,176.14 379,935.51 4.78
International Equity 6,132.56 248,326.10 2.47
U.S. Fixed Income 1,800.48 136,409.54 1.32
International Fixed Income 234.61 5,954.57 3.94
Commodities 1,013.38 88,195.15 1.15
Currency -384.59 4,747.57 -8.10
Leveraged -1,756.19 11,291.98 -15.55
Inverse 1,504.73 21,192.23 7.10
Asset Allocation 0.92 454.32 0.20
Alternatives 1,044.19 4,468.32 23.37
Total: 27,766.23 900,975.30 3.08

VWO Vs. EEM

Apart from SPY, which topped the September creations list, it’s been impossible not to notice how much emerging markets have been on a tear this year, and September was no exception.

Both the Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) were once again on our “Top Gainers” table and, once again, VWO had the upper hand in the asset-gathering.

VWO was third on the list, adding $2.36 billion, while EEM collected $830.5 million in new assets. EEM remains the bigger fund, with $45.09 billion in assets, to VWO’s $36.20 billion, but, if the current trend continues, VWO looks likely to catch up and surpass EEM in total assets before long.

Sixth on the asset-gathering list was the iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX), a measure of how nervous investors are about the economic outlook. The ETN, which spikes in value along with market volatility, added $823.7 million last month, lifting assets to $2.39 billion.

 

Top Gainers ($, Millions)
Ticker Name Issuer September Flows 9/30/2010 AUM September Turnover
SPY SPDR S&P 500 SSgA 10,282.84 78,013.97 478,713.61
QQQQ PowerShares QQQ Invesco PowerShares 4,275.67 22,140.09 78,197.85
VWO Vanguard Emerging Markets Vanguard 2,361.84 36,195.42 11,657.39
MDY SPDR S&P MidCap 400 SSgA 851.58 10,399.92 9,565.56
EEM iShares MSCI Emerging Markets BlackRock 830.48 45,093.49 47,800.27
VXX iPath S&P 500 VIX Short-Term Futures ETN Barclays Capital 823.65 2,386.73 9,846.02
SDY SPDR S&P Dividend SSgA 716.29 3,452.44 1,146.03
TZA Direxion Daily Small Cap Bear 3x Direxion 528.60 987.66 16,226.17
FAZ Direxion Daily Financial Bear 3x Direxion 498.50 1,298.46 14,071.05
DVY iShares Dow Jones Select Dividend BlackRock 482.03 5,054.85 922.00

 


 

The three biggest ETFs at the end of last month were still SPY, the SPDR Gold Trust (NYSEArca: GLD) and EEM, the iShares emerging markets fund.

But Vanguard’s VWO moved up one slot to fourth, switching places with the iShares MSCI EAFE Index Fund (NYSEArca: EFA). EFA suffered $284.4 million in outflows, though its assets still rose by $2.84 billion to $34.97 billion with the tide of rising markets.

The PowerShares QQQ ETF (NYSEArca: QQQQ) also move up one position to seventh from eighth. Assets in the fund of Nasdaq’s top 100 companies ballooned more than 40 percent, $4.28 billion of that in new assets and not quite as much in market gains.

GLD, as noted, remained the second-biggest U.S. ETF, though net creations dropped to just $119.6 million, about seven times less than a month before. Gold remains a popular investment, but there are signs some investors are starting to doubt the precious metal can go much higher. We explored aspects of that sentiment in our latest “Short Report,” titled “Pressure On TLT, GLD Builds.”

 

ETF Giants ($, Millions)
Ticker Name Issuer September Flows 9/30/2010 AUM September Turnover
SPY SPDR S&P 500 SSgA 10,282.84 78,013.97 478,713.61
GLD SPDR Gold SSgA 119.60 54,809.78 34,695.09
EEM iShares MSCI Emerging Markets BlackRock 830.48 45,093.49 47,800.27
VWO Vanguard Emerging Markets Vanguard 2,361.84 36,195.42 11,657.39
EFA iShares MSCI EAFE BlackRock -284.38 34,937.17 22,953.67
IVV iShares S&P 500 BlackRock 42.54 22,685.98 7,431.68
QQQQ PowerShares QQQ Invesco PowerShares 4,275.67 22,140.09 78,197.85
LQD iBoxx $ Investment Grade Corporate Bond BlackRock 388.85 14,841.97 2,848.62
VTI Vanguard Total Stock Market Vanguard -222.33 14,630.26 2,511.90
IWM iShares Russell 2000 BlackRock -409.81 13,172.58 84,713.50

Among the ETFs that suffered outflows in September, was the iShares Barclays TIPS Bond Fund (NYSEArca: TIP). It had redemptions of $423 million in assets in a sign that investors have recently become more concerned about deflation than inflation.

TIP is a bond fund that protects investors from loss of purchasing through adjustments to principal based on the
U.S.
consumer price index.

 

Biggest Losers ($, Millions)
Ticker Name Issuer September Flows 9/30/2010 AUM September Turnover
FAS Direxion Daily Financial Bull 3x Direxion -486.56 1,686.39 16,538.30
IWM iShares Russell 2000 BlackRock -409.81 13,172.58 84,713.50
IEI iShares Barclays 3-7 Year Treasury Bond BlackRock -326.56 1,395.13 818.44
EFA iShares MSCI EAFE BlackRock -284.38 34,937.17 22,953.67
UUP PowerShares DB US Dollar Index Bullish Invesco PowerShares -282.71 702.99 1,439.74
XLF Financial Select Sector SPDR SSgA -272.60 5,248.81 24,196.60
TNA Direxion Daily Small Cap Bull 3x Direxion -237.36 458.92 11,911.24
VTI Vanguard Total Stock Market Vanguard -222.33 14,630.26 2,511.90
BIL SPDR Barclays Capital 1-3 Month T-Bill SSgA -183.42 1,040.87 632.95
MINT Pimco Enhanced Short Maturity Strategy Pimco -169.39 349.09 88.88

 


 

It’s no surprise that SPY still sits atop our “Liquidity Mavens” list, which tells us which ETFs are the most heavily traded funds. No ETF even comes close to SPY.

Its $478 billion in turnover is more than five times more liquid than the No. 2 ETF, the small-cap iShares Russell 2000 ETF (NYSEArca: IWM). IWM displaced the “Qs” Nasdaq ETF, which dropped to No. 3 on the mavens list.

 

Liquidity Mavens ($, Millions)
Ticker Name Issuer September Flows 9/30/2010 AUM September Turnover
SPY SPDR S&P 500 SSgA 10,282.84 78,013.97 478,713.61
IWM iShares Russell 2000 BlackRock -409.81 13,172.58 84,713.50
QQQQ PowerShares QQQ Invesco PowerShares 4,275.67 22,140.09 78,197.85
EEM iShares MSCI Emerging Markets BlackRock 830.48 45,093.49 47,800.27
GLD SPDR Gold SSgA 119.60 54,809.78 34,695.09
EWZ iShares MSCI Brazil BlackRock 172.03 10,420.35 27,744.17
XLF Financial Select Sector SPDR SSgA -272.60 5,248.81 24,196.60
EFA iShares MSCI EAFE BlackRock -284.38 34,937.17 22,953.67
SDS ProShares UltraShort S&P 500 ProShares 205.25 3,450.93 21,336.91
TLT iShares Barclays 20+ Year Treasury Bond BlackRock -137.03 2,986.92 19,560.40

The league table below shows again, as it did last month, how much momentum Vanguard has and seems to be maintaining.

The
Valley Forge, Pa.-based firm added $3.16 billion to its assets last month, just a bit less than iShares.

Vanguard remains the third-largest U.S. ETF company, with $125.79 billion in total assets, but it’s not outrageous to wonder if it will ever surpass No. 2 State Street Global Advisors and maybe even iShares, the world’s biggest ETF company.

 


 

September 2010 League Tables
Issuer September Flows 9/30/2010 AUM ($, M)
BlackRock 3,676.73 411,544.15
SSgA 13,271.01 215,943.02
Vanguard 3,159.83 125,787.24
Invesco PowerShares 4,551.81 50,206.30
ProShares -461.42 24,604.44
Van Eck 594.44 16,645.68
WisdomTree 580.37 7,387.96
Barclays Capital 1,055.89 8,358.28
Direxion 179.72 6,788.38
Rydex 39.66 5,868.29
US Commodities Funds 0.00 0.00
Merrill Lynch -189.63 4,562.43
Claymore 0.00 0.00
First Trust 526.13 3,503.38
JPMorgan Chase 0.00 1,606.29
ETF Securities 244.54 2,203.26
Charles Schwab 117.72 1,738.55
PIMCO -107.42 1,308.81
ELEMENTS 29.77 993.55
RevenueShares -13.15 448.76
Global X 147.55 650.26
GreenHaven -3.53 312.33
UBS 15.74 295.32
IndexIQ 18.93 217.43
Xshares -7.97 144.48
Fidelity 0.00 0.00
Emerging Global Shares

44.88

173.70
Old Mutual -2.69 78.70
Jefferies 2.13 82.31
ALPS 117.36 245.03
Advisorshares 3.41 73.52
Goldman Sachs 0.00 63.68
iShares 1.52 70.79
Credit Suisse 8.50 83.54
Grail Advisors 0.00 18.17
GlobalShares 0.00 18.01
Geary Advisors 0.00 0.00
ALPS 0.00 11.06
FaithShares 0.00 10.78
U.S. One Trust 0.00 5.17
Pax World 0.00 2.54
Javelin 1.74 5.88

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