Equity & Fixed Income ETFs Fuel Healthy Sept. Flows

October 03, 2016

Investors poured just over $15 billion into U.S.-listed ETFs in September, bringing year-to-date ETF net creations to $156.3 billion—a 7.3% growth rate from year-end 2015 asset under management (AUM) levels.

U.S. equity and U.S. fixed-income ETFs were almost equally popular last month, with each asset class raking in roughly half of the month’s total asset haul and betraying what appears to be a strong domestic bias among ETF investors.

The Real Estate Select Sector SPDR Fund (XLRE) saw September’s largest net creation—about $3.2 billion—an unsurprising and largely expected result as real estate became its own sector under GICS. The bulk of these fresh net dollars came from the Financial Select Sector SPDR Fund (XLF), as financials divested their real-estate-linked assets.

No Common Theme Among Most Popular ETFs

The list of top gainers last month also included demand for myriad asset exposures. For instance, developed as well as emerging market equity funds were also found among the top 10 creations for September. Also present was $1.14 billion in inflows into the VanEck Vectors Gold Miners ETF (GDX), amounting to an 11% jump in the fund’s AUM in one month. GDX has had a stellar run so far in 2016, rallying nearly 88% year-to-date while attracting nearly $3 billion in new assets.

On the fixed-income side, the Vanguard Short-Term Bond Index Fund (BSV) landed on the month’s top 10 list. Some of the strong demand for shorter-dated exposure has to do with forecasts for a rate hike still this year.

What was missing from the top gainers list was the SPDR Gold Trust (GLD). Commodities attracted a meager $182 million in net inflows last month, but GLD is still managing to hold on to 2016’s top spot, with net creations of $12.1 billion year-to-date.

Currency-Hedged ETFs Continue To Struggle

On the flip side, September was again a difficult month for currency-hedged strategies, particularly those focused on European securities. These funds have continued to struggle in the face of a softening U.S. dollar, which is down nearly 4% year-to-date, as well as mounting concerns centered on the eurozone’s financial sector.

The growing number of negative Deutsche Bank headlines and fears of the systemic risk associated with the bank’s financial woes are partly to blame for investors’ aversion for Europe-focused exposure.

The Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF) bled $2 billion last month—a 20% drop in AUM—bringing the fund’s year-to-date asset outflows to $4.7 billion. As an issuer of 50-plus exchange-traded products including 20 ETNs, Deutsche Bank has now seen net outflows of $6.13 billion year-to-date, putting the troubled bank’s total ETP-linked asset at about $14 billion.

The WisdomTree Europe Hedged Equity Fund (HEDJ), again among the month’s 10 biggest redemptions, has now bled more than $7.3 billion in 2016. HEDJ is the year’s largest ETF asset outflow. Its issuer, WisdomTree, has now faced a massive $12.8 billion in ETF asset redemptions so far this year, largely due to the losses in currency-hedged strategies.


Top Gainers (September 2016)

Ticker Name Issuer Net Flows ($M) AUM ($M) % of AUM YTD 2016 Net Flows ($M)
XLRE Real Estate Select Sector SPDR Fund State Street Global Advisors 3,213.98 3,232.18 17,660.62% 3,325.79
IVV iShares Core S&P 500 ETF BlackRock 1,412.32 78,958.10 1.82% 4,933.55
IWD iShares Russell 1000 Value ETF BlackRock 1,243.75 30,866.57 4.20% 1,795.24
GDX VanEck Vectors Gold Miners ETF Van Eck 1,138.66 11,200.63 11.32% 2,920.46
VWO Vanguard FTSE Emerging Markets ETF Vanguard 982.42 43,093.51 2.33% 3,975.24
XOP SPDR S&P Oil & Gas Exploration & Production ETF State Street Global Advisors 748.95 2,340.04 47.07% 231.98
VEA Vanguard FTSE Developed Markets ETF Vanguard 711.21 37,126.42 1.95% 7,132.47
IEMG iShares Core MSCI Emerging Markets ETF BlackRock 709.62 17,093.91 4.33% 5,510.88
VOO Vanguard S&P 500 Index Fund Vanguard 665.14 51,160.95 1.32% 8,392.57
BSV Vanguard Short-Term Bond Index Fund Vanguard 653.50 18,934.80 3.57% 1,257.66


Top Gainers (Year-to-Date)

Ticker Name Issuer Net Flows ($M) AUM ($M) % of AUM September 2016 Net Flows ($M)
GLD SPDR Gold Trust State Street Global Advisors 12,100.45 40,159.76 43.12% 204.73
AGG iShares Core U.S. Aggregate Bond ETF BlackRock 9,773.93 41,733.78 30.58% 448.50
VOO Vanguard S&P 500 Index Fund Vanguard 8,392.57 51,160.95 19.62% 665.14
LQD iShares iBoxx $ Investment Grade Corporate Bond ETF BlackRock 7,187.19 33,236.72 27.59% 271.40
VEA Vanguard FTSE Developed Markets ETF Vanguard 7,132.47 37,126.42 23.78% 711.21
EEM iShares MSCI Emerging Markets ETF BlackRock 6,720.12 31,606.31 27.00% 33.19
USMV iShares Edge MSCI Min Vol USA ETF BlackRock 6,317.25 14,442.30 77.75% 75.65
IEMG iShares Core MSCI Emerging Markets ETF BlackRock 5,510.88 17,093.91 47.58% 709.62
VNQ Vanguard REIT Index Fund Vanguard 5,025.54 35,143.68 16.69% 474.10
IVV iShares Core S&P 500 ETF BlackRock 4,933.55 78,958.10 6.66% 1,412.32

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