January Flows Favor Fixed Income ETFs

February 01, 2016

Investors flocked to U.S. fixed-income ETFs in January, pouring some $13 billion into funds tapping a wide range of duration, from short- to mid- to long-dated debt. Also popular was the SPDR Gold Trust (GLD).

It’s perhaps unsurprising to see investor demand for the safety of high-grade U.S. bond funds such as the iShares Short Treasury Bond (SHV) and the iShares 20+ Year Treasury Bond (TLT), as well as for safe-havenlike assets such as gold, in a month when the S&P 500 Index slipped more than 100 points, or roughly 5%, amid volatile action. January was not pretty for stocks.

There seemed to be a lot of people buying into the notion that as January goes, so goes the year, and there were plenty of economists and market analysts reinforcing that notion with calls for a recession in the U.S. ahead.

QQQ Led Outflows

U.S. equity ETFs, in fact, bled a net of $11 billion in assets in January. The $36 billion PowerShares QQQ (QQQ) was the least popular fund of them all, with net redemptions of $2.03 billion, according to FactSet data.

In total, U.S.-listed ETFs gathered only $348 million in fresh net assets last month—a weak start to the year in terms of flows, but not an unusual one.

Just a year ago, January 2015 saw a similar distaste among investors for U.S. equity ETFs, which saw $22 billion in net outflows in one month. That same month, U.S. fixed-income ETFs attracted more than $7 billion in net creations.

Int’l Equity ETFs See Outflows

What’s different this year is that demand for international equity ETFs was also muted to start the year. Investors yanked $4.2 billion from the asset class in January.

The same ETFs that led inflows of more than $6 billion into international stock funds in January a year ago were found among the past month’s biggest redemptions this time around.

The WisdomTree Europe Hedged Equity (HEDJ) and the WisdomTree Japan Hedged Equity (DXJ) each saw net outflows of just under $1 billion last month.

Contact Cinthia Murphy at [email protected].

Top Gainers

Ticker Name Issuer January 2016
Flows
January 2016
AUM ($, M)
January 2016
Turnover
SHV iShares Short Treasury Bond BlackRock 2,690.02 5,765.60 4,320.64
TLT iShares 20+ Year Treasury Bond BlackRock 1,668.67 8,114.53 27,816.16
VOO Vanguard S&P 500 Vanguard 1,665.00 40,105.91 16,302.41
IEF iShares 7-10 Year Treasury Bond BlackRock 1,367.10 9,675.96 7,416.31
SPY SPDR S&P 500 SSgA 1,335.35 174,648.98 794,706.36
SHY iShares 1-3 Year Treasury Bond BlackRock 1,259.92 12,582.50 4,843.62
GLD SPDR Gold SSgA 959.20 23,914.29 16,131.14
USO United States Oil US Commodity Funds 904.90 3,659.40 12,670.10
XLU Utilities Select SPDR SSgA 810.74 6,844.08 13,978.76
AGG iShares Core U.S. Aggregate Bond BlackRock 792.24 31,721.07 8,486.18

Biggest Losers ($, Millions)

Ticker Name Issuer January 2016
Flows
January 2016
AUM ($, M)
January 2016
Turnover
QQQ PowerShares QQQ Invesco PowerShares -2,036.52 37,824.11 124,059.47
EEM iShares MSCI Emerging Markets BlackRock -1,690.68 18,343.58 47,322.84
IWD iShares Russell 1000 Value BlackRock -1,364.19 24,562.17 9,882.42
IWF iShares Russell 1000 Growth BlackRock -1,319.32 28,488.97 8,511.23
XLF Financial Select SPDR SSgA -1,247.22 16,522.25 31,255.56
XLK Technology Select SPDR SSgA -1,181.78 11,993.99 14,896.64
DXJ WisdomTree Japan Hedged Equity WisdomTree -986.00 12,737.86 8,038.50
HEDJ WisdomTree Europe Hedged Equity WisdomTree -810.86 15,328.06 6,930.66
FDN First Trust Dow Jones Internet First Trust -765.85 3,597.97 2,484.02
XLY Consumer Discretionary Select SPDR SSgA -636.56 10,195.48 18,099.24

Asset Class Data

  Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity -11,247.10 1,021,425.81 -1.10%
International Equity -4,232.89 450,270.61 -0.94%
U.S. Fixed Income 13,127.54 343,110.84 3.83%
International Fixed Income 342.15 28,093.90 1.22%
Commodities 2,234.14 48,690.94 4.59%
Currency 61.49 1,429.36 4.30%
Leveraged 1,269.29 21,585.00 5.88%
Inverse -310.05 17,014.40 -1.82%
Asset Allocation -645.41 5,146.84 -12.54%
Alternatives -250.76 3,032.31 -8.27%
Total: 348.41 1,939,800.01 0.02%

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