Dovish Fed Spurs $18B Into ETFs

Sumit Roy

Senior ETF Analyst

Nov 30, 2018

Reviewed by: Sumit Roy

Edited by: Sumit Roy

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Encouraging news from the Fed and Washington kindled animal spirits this week as investors added nearly $18 billion of new money into U.S.-listed ETFs. A cool $10.3 billion flowed into U.S. equity ETFs; $4.3 billion went into international equity ETFs; and $2.8 billion entered U.S. fixed-income ETFs, during the week ending Thursday, Nov. 29.

The data, which come from FactSet, also showed year-to-date inflows for ETFs climbed to $258.5 billion.

Stocks Bolstered By Dovish Fed

Perhaps the biggest news on the week came on Wednesday, when Fed Chairman Jerome Powell said that interest rates were “just below” neutral—the level which neither restricts nor stimulates economic growth.

The comments were a sharp reversal from what the Fed chair said in early October, when he remarked that rates were “a long way” from neutral, setting off a big sell-off on Wall Street. The latest comments had the opposite effect: The S&P 500 soared 2.3% on Wednesday alone.

Bolstered by a more dovish Fed, investors happily added to their positions in U.S. equities. The SPDR S&P 500 ETF Trust (SPY), the iShares Edge MSCI Min Vol U.S.A. ETF (USMV) and the iShares Russell 2000 ETF (IWM) were among the biggest flows winners of the week.

At the same time, the iShares Core MSCI Emerging Markets ETF (IEMG) saw the largest inflows among international equity ETFs. Hopes that the U.S. and China might reach a trade deal this weekend at the G-20 summit on Argentina have, at least temporarily, brightened the prospects for emerging markets.

Corporate Bonds Shunned

On the flip side, investors continued to shun riskier bonds this week. Though short-term Treasury ETFs, like the iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares Short Treasury Bond ETF (SHV) registered hefty inflows, corporate bond ETFs such as the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD), the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) and the Invesco Senior Loan ETF (BKLN) were hit with outflows.

Prices for BKLN dipped to a 2 ½-year low on Thursday.

For a full list of this week’s top inflows and outflows, see the tables below:

Top 10 Creations (All ETFs)

Ticker	Name	Net Flows ($,mm)	AUM ($, mm)	AUM % Change
SPY	SPDR S&P 500 ETF Trust	2,443.35	265,046.44	0.92%
IEMG	iShares Core MSCI Emerging Markets ETF	1,350.19	49,770.10	2.71%
SHY	iShares 1-3 Year Treasury Bond ETF	956.06	17,095.71	5.59%
USMV	iShares Edge MSCI Min Vol U.S.A. ETF	767.92	19,192.26	4.00%
SHV	iShares Short Treasury Bond ETF	684.44	17,303.33	3.96%
IWM	iShares Russell 2000 ETF	678.02	45,719.77	1.48%
TLT	iShares 20+ Year Treasury Bond ETF	539.48	7,526.35	7.17%
VXF	Vanguard Extended Market ETF	536.73	6,842.83	7.84%
XLP	Consumer Staples Select Sector SPDR Fund	520.66	10,190.41	5.11%
IWD	iShares Russell 1000 Value ETF	511.41	38,881.50	1.32%

Top 10 Redemptions (All ETFs)

Ticker	Name	Net Flows ($,mm)	AUM ($, mm)	AUM % Change
LQD	iShares iBoxx USD Investment Grade Corporate Bond ETF	-593.15	29,873.49	-1.99%
HYG	iShares iBoxx USD High Yield Corporate Bond ETF	-331.93	14,037.15	-2.36%
AGG	iShares Core U.S. Aggregate Bond ETF	-293.39	53,533.79	-0.55%
BKLN	Invesco Senior Loan ETF	-282.36	6,112.61	-4.62%
DIA	SPDR Dow Jones Industrial Average ETF Trust	-268.05	21,996.72	-1.22%
IYR	iShares U.S. Real Estate ETF	-203.68	3,502.32	-5.82%
SHYG	iShares 0-5 Year High Yield Corporate Bond ETF	-178.30	2,843.51	-6.27%
KRE	SPDR S&P Regional Banking ETF	-172.70	3,991.09	-4.33%
UNG	United States Natural Gas Fund LP	-171.83	387.21	-44.38%
EWQ	iShares MSCI France ETF	-150.84	594.56	-25.37%

ETF Weekly Flows By Asset Class

	Net Flows ($, mm)	AUM ($, mm)	% of AUM
U.S. Equity	10,282.96	2,065,814.30	0.50%
International Equity	4,288.40	758,550.06	0.57%
U.S. Fixed Income	2,726.36	571,183.67	0.48%
International Fixed Income	379.99	66,322.83	0.57%
Commodities	-248.12	59,381.53	-0.42%
Currency	16.02	1,131.15	1.42%
Leveraged	221.74	35,185.83	0.63%
Inverse	-28.67	12,765.02	-0.22%
Asset Allocation	43.00	9,037.74	0.48%
Alternatives	263.40	4,859.87	5.42%
Total:	17,945.08	3,584,232.00	0.50%

Asset Classes (Year-to-Date)

	Net Flows ($, mm)	AUM ($, mm)	% of AUM
U.S. Equity	116,178.91	2,065,814.30	5.62%
International Equity	52,202.02	758,550.06	6.88%
U.S. Fixed Income	68,511.43	571,183.67	11.99%
International Fixed Income	11,553.59	66,322.83	17.42%
Commodities	-527.00	59,381.53	-0.89%
Currency	-33.84	1,131.15	-2.99%
Leveraged	7,293.22	35,185.83	20.73%
Inverse	1,996.28	12,765.02	15.64%
Asset Allocation	806.58	9,037.74	8.92%
Alternatives	494.14	4,859.87	10.17%
Total:	258,475.33	3,584,232.00	7.21%

Top 10 Volume Surprises, Funds >$50 mm AUM

Ticker	Name	Average Volume (30 Day)	1 Week Average Volume	% of Average
TDTF	FlexShares iBoxx 5 Year Target Duration TIPS Index Fund	191,790	809,773	422.22%
BCI	Aberdeen Standard Bloomberg All Commodity Strategy K-1 Free ETF	73,687	285,784	387.83%
CVY	Invesco Zacks Multi-Asset Income ETF	45,211	151,651	335.43%
ESGV	Vanguard ESG U.S. Stock ETF	46,579	154,732	332.19%
KNOW	Direxion All Cap Insider Sentiment Shares	45,403	139,469	307.18%
CMBS	iShares CMBS ETF	27,189	82,870	304.79%
VRP	Invesco Variable Rate Preferred ETF	641,664	1,600,033	249.36%
DEUS	Xtrackers Russell 1000 Comprehensive Factor ETF	46,346	113,978	245.93%
RBIN	Nationwide Risk-Based International Equity ETF	514	1,200	233.57%
RBUS	Nationwide Risk-Based U.S. Equity ETF	217	381	175.82%

Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

Sumit Roy

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Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.

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Dovish Fed Spurs $18B Into ETFs

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