Investors Find Safety In Large Cap ETFs In July

August 04, 2015

Investors poured nearly $23 billion into U.S.-listed ETFs in July, about half of which landed into U.S. equity funds. The monthly haul exceeded June’s $18 billion in inflows—and set year-to-date ETF creations well-positioned to match—if not exceed—last year’s record asset haul of $243 billion.

If in the first six months of the year, ETF creations were already a record; second-half ETF flows have historically been more powerful than in the first half.

Biggest ETFs Attract Inflows

The most popular ETFs in July included the three biggest S&P 500 funds. The SPDR S&P 500 (SPY | A-98), the iShares Core S&P 500 ETF (IVV | A-98) and the Vanguard S&P 500 ETF (VOO | A-99) raked in a combined $4.9 billion in assets.

“Investors really favored the safety of large-cap U.S. equities over riskier small-caps and emerging markets,” Todd Rosenbluth, director of ETF and mutual fund research at S&P Capital IQ, told ETF.com.

“It’s interesting to see the three ETFs tied to the S&P 500 Index leading the charge, since we saw international equities driving the flows earlier in the year,” he added. “Investors seem to believe that better-than-expected earnings will move the large-caps higher.”

Emerging Market & Small-Cap Outflows

Indeed, on the flip side, the least popular was the iShares MSCI Emerging Market ETF (EEM | B-99) with net redemptions of almost $2.5 billion. Those outflows came as the fund slipped more than 7 percent.

The iShares Russell 2000 ETF (IWM | A-88) was also among the month’s biggest net redemptions as investors trimmed exposure to small-caps. The outflows exceeding $1.5 billion were a complete reversal from the inflows of more than $2.12 billion seen the month prior, according to ETF.com data.

Other highlights in July included a return of appetite for U.S. fixed income—the asset class gathered more than $6.5 billion in fresh net assets in a month. The demand is most likely tied to expectations for Federal Reserve action before year-end.

Many expect the Fed to begin to raise rates in September, and July’s demand for U.S. bond funds suggests “investors continue to use ETFs as a way of tilting their portfolios,” Rosenbluth said.

The short-term bond fund iShares 1-3 Year Treasury Bond ETF (SHY | A-97) was the second-most-popular ETF in July—second only to SPY—with net creations of nearly $2 billion in the month.

On the commodity front, July was not a good month for gold investors, who saw gold prices sink more than 6 percent to a five-year low below $1,100 an ounce, and the SPDR Gold Trust (GLD | A-100) bleed more than $1 billion.

July 2015 Asset Class Data

Net Flows ($M) AUM ($M) % of AUM
U.S. Equity 12,585.89 1,185,034.68 1.06%
International Equity 3,365.35 521,511.62 0.65%
U.S. Fixed Income 6,571.90 307,369.05 2.14%
International Fixed Income 351.09 26,631.35 1.32%
Commodities -1,001.61 49,937.17 -2.01%
Currency -99.88 1,349.24 -7.40%
Leveraged 1,835.27 24,452.86 7.51%
Inverse -557.05 18,629.43 -2.99%
Asset Allocation 23.84 5,845.44 0.41%
Alternatives -114.50 3,305.29 -3.46%
Total: 22,960.30 2,144,066.13 1.07%

July 2015 Top Gainers

Ticker Fund Issuer Flows AUM ($M) Turnover
SPY SPDR S&P 500 SSgA 2,650.22 176,916.72 533,302.94
SHY iShares 1-3 Year Treasury Bond BlackRock 1,940.91 10,973.38 4,420.03
VOO Vanguard S&P 500 Vanguard 1,261.77 34,247.31 7,294.39
HEDJ WisdomTree Europe Hedged Equity WisdomTree 1,205.23 21,874.41 6,809.65
IWB iShares Russell 1000 BlackRock 1,123.22 12,599.79 3,110.94
IVV iShares Core S&P 500 BlackRock 1,011.79 70,212.20 17,813.68
DBEF Deutsche X-trackers MSCI EAFE Hedged Equity ETF Deutsche Bank 994.93 13,583.33 2,985.22
XLF Financial Select SPDR SSgA 914.91 20,382.83 16,432.04
IBB iShares Nasdaq Biotechnology BlackRock 827.07 10,073.61 14,443.20
USO United States Oil US Commodity Funds 820.79 2,565.79 9,396.59

July 2015 Biggest Losers

Ticker Fund Issuer Flows AUM ($M) Turnover
EEM iShares MSCI Emerging Markets BlackRock -2,488.20 24,615.06 45,648.21
IWM iShares Russell 2000 BlackRock -1,585.85 27,510.06 88,316.14
GLD SPDR Gold SSgA -1,375.71 23,747.02 17,363.97
EFA iShares MSCI EAFE BlackRock -732.93 61,428.38 28,248.88
BND Vanguard Total Bond Market Vanguard -607.44 26,492.77 3,366.95
FXI iShares China Large-Cap BlackRock -512.87 6,593.02 30,730.19
XLK Technology Select SPDR SSgA -431.39 13,000.22 8,124.45
DVY iShares Select Dividend BlackRock -322.85 13,760.29 1,297.96
AAXJ iShares MSCI All Country Asia ex Japan BlackRock -314.18 3,668.68 2,005.33
IJH iShares Core S&P Mid-Cap BlackRock -274.73 26,761.42 4,497.84

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