Currency Hedged ETFs Won Big In Feb Flows

March 02, 2015

Junk Back In Favor

As noted, HYG was No. 2 on the February inflows list, with creations totaling almost $2.4 billion. Total assets in the fund reached almost $18 billion.

Additionally, the SPDR Barclays High Yield Bond ETF (JNK | B-68), the ETF market's second-biggest junk bond fund, gathered almost $1.25 billion in fresh assets, lifting total assets in the fund to about $11.75 billion.

As noted above, the high-yield market finished 2014 heavily out of favor, in part because of concerns oil drillers taking part in the fracking revolution had issued high-yield debt to ramp up output. The problem was that all the extra oil on the market began to hit prices, in turn affecting the capacity of such firms to service their debt.

But investors in full command of just what the diversity of indexes underlying broad funds like HYG and JNK means, understood that problems in the oil patch were at most a peripheral concern to such funds. Moreover, in the worst-case scenario, were a given fracking firm's credits to default, they would quickly be kicked out of a broad bond index.

In that light, value-hunters who bought beaten-down shares of HYG or JNK last month probably made shrewd moves.

February 2015 Biggest Losers

Ticker Fund Issuer Flows AUM ($, M) Turnover
IYW iShares U.S. Technology BlackRock -1,562.95 3,082.21 2,286.82
IWM iShares Russell 2000 BlackRock -1,142.82 28,176.54 63,776.82
IYR iShares U.S. Real Estate BlackRock -939.38 5,437.44 18,731.46
VEA Vanguard FTSE Developed Markets Vanguard -730.20 25,356.40 5,280.08
IYF iShares U.S. Financials BlackRock -661.67 1,331.45 1,196.55
VIG Vanguard Dividend Appreciation Vanguard -577.66 21,176.17 1,777.70
FXU First Trust Utilities AlphaDEX First Trust -491.88 307.73 632.12
FXL First Trust Technology AlphaDEX First Trust -467.94 678.14 654.36
IVV iShares Core S&P 500 BlackRock -466.21 70,378.78 16,457.48
XLK Technology Select SPDR SSgA -458.99 13,260.53 5,383.01

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