Investors Buy Bond ETFs, Ditch Japan ETFs

May 03, 2016

Investors poured a net of $16.6 billion into U.S.-listed ETFs in the month of April, keeping the ETF industry’s asset gathering at a much slower pace than year-ago levels.

Year-to-date, U.S.-listed ETFs have attracted some $41 billion in net creations. That compares with inflows of about $72 billion in the same four-month period in 2015.

Safer Assets

A look at the top asset gainers last month shows that there was strong demand for safer-type assets, even in the equity space. The iShares MSCI USA Minimum Volatility ETF (USMV | A-69) was one of the month’s most in-demand strategies in April, raking in $1.26 billion.

So far this year, the fund has gathered some $4.7 billion in inflows as it continues to outperform the SPDR S&P 500 (SPY | A-97). USMV has delivered gains of 6.1% since the beginning of the year, or about 3.5 percentage points more than SPY.

As a segment, U.S. fixed-income ETFs raked in $4.1 billion in the last month, with strategies such as the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD | A-77) as well as aggregate bond funds all making the top-10 list.

U.S. equity funds were, again, a popular choice last month, attracting some $10.6 billion in net creations, but the largest creations were seen in traditional broad large-cap strategies, and the Vanguard REIT Index Fund (VNQ | A-91).

“Investors were more risk averse in April, favoring investment-grade bonds ETFs and lower-volatility strategies,” S&P Capital IQ’s Todd Rosenbluth said.

When it comes to safe assets, what was not among the month’s top gainers was the SPDR Gold Trust (GLD | A -100)—a fund that remains 2016’s leading asset gatherer, with inflows exceeding $6.15 billion year-to-date. Still, in April, GLD was actually among the biggest losers, with net redemptions of $645 million.

Japan, Eurozone Out

What was out of favor was exposure to Japan and Europe-based ETFs “amid macro concerns,” Rosenbluth noted. Funds like the iShares MSCI Japan ETF (EWJ | B-94), the iShares MSCI Eurozone ETF (EZU | B-84) and the WisdomTree Europe Hedged Equity Fund (HEDJ | B-47) were found among the month’s biggest redemptions.

HEDJ has now bled nearly $3.1 billion in net outflows year-to-date, helping bump WisdomTree down to the sixth spot among top issuers. Charles Schwab now ranks at No. 5.

Contact Cinthia Murphy at [email protected].

Top Gainers April 2016

Ticker Fund Issuer Net Flows ($M) AUM ($M) % of AUM YTD Net Flows ($M)
SPY SPDR S&P 500 ETF Trust SSgA 1,659.40 185,348.86 0.90% -1,270.74
LQD iShares iBoxx $ Investment Grade Corporate Bond ETF BlackRock 1,356.20 28,682.05 4.73% 3,297.23
USMV iShares MSCI USA Minimum Volatility ETF BlackRock 1,265.21 12,378.49 10.22% 4,702.75
VNQ Vanguard REIT Index Fund Vanguard 950.86 30,203.66 3.15% 2,058.63
VOO Vanguard S&P 500 Index Fund Vanguard 918.23 44,416.25 2.07% 3,535.31
AGG iShares Core U.S. Aggregate Bond ETF BlackRock 884.81 35,761.00 2.47% 4,294.80
TIP iShares TIPS Bond ETF BlackRock 882.23 17,445.99 5.06% 2,551.10
XLV Health Care Select Sector SPDR Fund SSgA 879.38 12,760.34 6.89% -633.18
BND Vanguard Total Bond Market Index Fund Vanguard 834.33 30,090.98 2.77% 2,025.42
EEM iShares MSCI Emerging Markets ETF BlackRock 793.70 25,905.44 3.06% 3,212.84


Biggest Losers April 2016

Ticker Fund Issuer Net Flows ($M) April 2016 AUM ($M) % of AUM YTD Net Flows ($M)
EWJ iShares MSCI Japan ETF BlackRock -1,388.27 16,563.54 -8.38% -2,726.44
QQQ PowerShares QQQ Trust Invesco PowerShares -1,151.57 36,250.80 -3.18% -4,068.49
SHY iShares 1-3 Year Treasury Bond ETF BlackRock -1,147.07 10,310.93 -11.12% -1,097.88
TLT iShares 20+ Year Treasury Bond ETF BlackRock -937.02 8,905.28 -10.52% 2,289.68
EZU iShares MSCI Eurozone ETF BlackRock -848.17 12,127.68 -6.99% -2,167.30
XLP Consumer Staples Select Sector SPDR Fund SSgA -783.81 9,352.51 -8.38% 807.88
HEDJ WisdomTree Europe Hedged Equity Fund WisdomTree -728.13 13,163.31 -5.53% -3,098.41
IYR iShares U.S. Real Estate ETF BlackRock -698.40 4,071.30 -17.15% -349.58
IEI iShares 3-7 Year Treasury Bond ETF BlackRock -667.03 5,541.09 -12.04% 407.08
GLD SPDR Gold Trust SSgA -645.68 33,447.33 -1.93% 6,158.82


Asset Classes April 2016

Net Flows ($M) AUM ($M) % of AUM
U.S. Equity 10,604.81 1,211,756.76 0.88%
International Equity 522.09 487,219.87 0.11%
U.S. Fixed Income 4,100.20 371,244.44 1.10%
International Fixed Income 1,160.85 33,606.10 3.45%
Commodities -766.92 63,188.45 -1.21%
Currency -230.03 1,240.88 -18.54%
Leveraged -1,101.82 24,552.46 -4.49%
Inverse 1,447.56 19,908.42 7.27%
Asset Allocation 161.87 5,734.31 2.82%
Alternatives 721.67 3,978.74 18.14%
Total: 16,620.28 2,222,430.42 0.75%

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