Defensive ETFs Dominate May Flows

June 02, 2016

Investors poured just $2.1 billion into U.S.-listed ETFs in May, putting year-to-date ETF net creations at only $49 billion, about half of May 2015’s net inflows of $84 billion.

The asset-gathering pace has been slow—much slower than the industry has gotten accustomed to—and investors continue to pile in to defensive-type strategies as the market chops sideways.

But the good news, as Dave Nadig, director of ETFs for FactSet, put it, is that regardless of whether investors are “playing defense,” they “still want to put their money to work.” That’s what positive asset inflows into ETFs really means.

Gold & Fixed-Income ETFs Favored

So what are they buying the most? The same asset they’ve been piling into all year: gold.

Gold ETFs raked in more than $3 billion in fresh assets in May. The most popular ETF in May again was the SPDR Gold Trust (GLD | A-100), which has attracted $8.8 billion so far this year. In all, commodity ETFs have now gathered nearly $12 billion year-to-date—most of which has landed into gold funds.

Another pocket of the market that has been raking in assets this year is U.S. fixed income, with net inflows of $37.5 billion so far in 2016. Treasury inflation-protection securities (TIPS) and Treasury-focused funds that have been leading the gains here—read: safety.

The iShares Core U.S. Aggregate Bond ETF (AGG | A-98) saw net inflows of more than $1 billion again in May—making it the second-most-popular fund, with net creations now exceeding $5 billion for the year.

Currency, Equity ETFs Fall Out Of Favor

“The story on ETF flows in May was a bit anemic—which actually makes it a good test case for looking at investor sentiment,” Nadig said in FactSet commentary. “At the asset-class level, the story for May is a continuation of the longer-term trend in 2016: Investors have shied away from equities broadly speaking and have gravitated toward fairly straightforward fixed-income and ETF exposures.”

“Currency-based products have fallen out of favor—both direct currency products and currency-hedged equity ETFs,” Nadig said. “So where has that money really been going? Gold.”

U.S. and international equities were net losers in May, losing a combined $7 billion during the month. Year-to-date, equities have been largely out of favor—U.S. equities have gathered a muted $3.9 billion in fresh net assets so far in 2016, while foreign stock funds have lost more than $14.6 billion. The tally of the 10 biggest asset losers so far this year comprises only equity funds, many of which were hugely popular last year.

Contact Cinthia Murphy at [email protected].

 

Top Gainers - May 2016

Ticker Fund Issuer May 2016 Net Flows ($,M) May 2016 AUM ($,M) % of AUM YTD 2016 Net Flows ($,M)
GLD SPDR Gold Trust SSgA 2,659.83 33,957.66 7.83% 8,838.11
AGG iShares Core U.S. Aggregate Bond ETF BlackRock 1,018.88 36,701.77 2.78% 5,314.21
VTV Vanguard Value Index Fund Vanguard 828.48 21,442.97 3.86% 1,962.49
GDX VanEck Vectors Gold Miners ETF Van Eck 768.95 7,065.65 10.88% 134.30
IWD iShares Russell 1000 Value ETF BlackRock 710.09 27,756.99 2.56% -745.88
TIP iShares TIPS Bond ETF BlackRock 665.41 18,004.82 3.70% 3,216.40
EFAV iShares Edge MSCI Min Vol EAFE ETF BlackRock 664.77 7,335.67 9.06% 2,671.90
VCIT Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard 664.44 8,728.95 7.61% 2,182.85
USMV iShares Edge MSCI Min Vol USA ETF BlackRock 660.07 13,250.16 4.98% 5,364.21
VV Vanguard Large Cap Index Fund Vanguard 651.74 7,400.56 8.81% 727.68

Biggest Losers - May 2016

Ticker Name Issuer May 2016 Net Flows ($,M) May 2016 AUM ($,M) % of AUM YTD 2016 Net Flows ($,M)
 SPY  SPDR S&P 500 ETF Trust SSgA -4,414.61 184,227.53 -2.40% -3,520.51
 EEM  iShares MSCI Emerging Markets ETF BlackRock -3,182.39 21,691.94 -14.67% 25.37
 HYG  iShares iBoxx $ High Yield Corporate Bond ETF BlackRock -2,629.88 15,043.89 -17.48% -126.44
EZU iShares MSCI Eurozone ETF BlackRock -1,409.33 10,650.36 -13.23% -3,574.65
EWJ iShares MSCI Japan ETF BlackRock -1,049.50 15,132.53 -6.94% -3,776.30
XLK Technology Select Sector SPDR Fund SSgA -920.32 12,406.86 -7.42% -1,530.10
 FXI  iShares China Large-Cap ETF BlackRock -878.44 3,454.10 -25.43% -1,491.51
 QQQ  PowerShares QQQ Trust Invesco PowerShares -808.97 36,873.05 -2.19% -4,879.44
 DIA  SPDR Dow Jones Industrial Average ETF Trust SSgA -797.46 11,730.93 -6.80% -1,454.90
HEDJ WisdomTree Europe Hedged Equity Fund WisdomTree -716.00 12,811.47 -5.59% -3,809.92

Asset Class Data - May 2016

Asset Ckass Net Flows ($, mm) AUM ($, mm) May 2016 Net% of AUM
U.S. Equity -667.28 1,235,247.26 -0.05%
International Equity -6,413.67 473,224.05 -1.36%
U.S. Fixed Income 3,514.20 374,053.10 0.94%
International Fixed Income 639.68 33,959.82 1.88%
Commodities 3,340.53 63,515.45 5.26%
Currency 36.07 1,230.11 2.93%
Leveraged -24.54 23,783.16 -0.10%
Inverse 1,337.42 21,129.98 6.33%
Asset Allocation 48.28 6,037.75 0.80%
Alternatives 344.89 4,086.68 8.44%
Total: 2,155.59 2,236,267.36 0.10%

Asset Class Data - YTD 2016

Asset Ckass Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity                    3,939.53     1,235,247.26 0.32%
International Equity -14,641.90 473,224.05 -3.09%
U.S. Fixed Income 37,551.00 374,053.10 10.04%
International Fixed Income 4,249.76 33,959.82 12.51%
Commodities 11,815.59 63,515.45 18.60%
Currency -192.18 1,230.11 -15.62%
Leveraged -424.54 23,783.16 -1.79%
Inverse 5,755.46 21,129.98 27.24%
Asset Allocation -510.17 6,037.75 -8.45%
Alternatives 1,495.72 4,086.68 36.60%
Total: 49,038.27 2,236,267.36 2.19%

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