Market Turmoil Spooks Bonds, Not Equities

Senior ETF Analyst

Oct 12, 2018

Reviewed by: Sumit Roy

Edited by: Sumit Roy

Tumultuous action in the stock and bond markets sent investors fleeing ETFs. The S&P 500 had its biggest drawdown since March this week, and the U.S. 10-year Treasury yield spiked to a seven-year high, prompting $2.9 billion to flow out of U.S.-listed ETFs.

Despite the stock market volatility—the S&P 500 fell as much as 7.8% from its all-time high—it wasn’t stocks that most ETF investors were dumping. In fact, almost $2 billion flowed into U.S. equity ETFs, according to the latest data from FactSet.

Conversely, a hefty $6.2 billion came out of U.S. fixed-income ETFs as the jump in Treasury yields spooked fixed-income investors out of their positions.

Corporate bond ETFs, in particular, fell swiftly out of favor. Funds like the iShares iBoxx USD High Yield Corporate Bond ETF (HYG), the SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD) had billions of dollars worth of outflows this week.

But not all fixed-income ETFs were shunned. The iShares 20+ Year Treasury Bond ETF (TLT) and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) actually found themselves on the top inflows list for the week, as some investors used the bond sell-off to lock in higher rates.

Meanwhile, on the equity side, the SPDR S&P 500 ETF Trust (SPY), the Vanguard S&P 500 ETF Trust (VOO), the iShares MSCI Japan ETF (EWJ) and the J.P. Morgan Alerian MLP Index ETN (AMJ) had the largest inflows during the week.

Though stocks fell notably this week, the data suggest that ETF investors weren’t panicking; on the contrary, they used the pullback as an opportunity to buy.

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	5,653.29	273,776.35	2.11%
VOO	Vanguard S&P 500 ETF	1,187.29	101,320.90	1.19%
DIA	SPDR Dow Jones Industrial Average ETF Trust	684.41	22,862.87	3.09%
TLT	iShares 20+ Year Treasury Bond ETF	586.93	8,423.42	7.49%
EWJ	iShares MSCI Japan ETF	567.26	17,360.20	3.38%
TQQQ	ProShares UltraPro QQQ	519.05	3,812.85	15.76%
AMJ	J.P. Morgan Alerian MLP Index ETN	511.40	3,793.36	15.58%
XLC	Communication Services Select Sector SPDR Fund	491.38	2,766.51	21.60%
BIL	SPDR Bloomberg Barclays 1-3 Month T-Bill ETF	466.48	4,010.65	13.16%
IXUS	iShares Core MSCI Total International Stock ETF	411.84	10,887.39	3.93%

Top 10 Redemptions (All ETFs)

Ticker	Name	Net Flows ($,mm)	AUM ($, mm)	AUM % Change
HYG	iShares iBoxx USD High Yield Corporate Bond ETF	-2,756.16	13,051.40	-17.44%
IWB	iShares Russell 1000 ETF	-2,754.04	17,631.66	-13.51%
AGG	iShares Core U.S. Aggregate Bond ETF	-2,193.77	53,189.39	-3.96%
JNK	SPDR Bloomberg Barclays High Yield Bond ETF	-1,333.43	8,003.89	-14.28%
LQD	iShares iBoxx USD Investment Grade Corporate Bond ETF	-1,243.01	32,192.09	-3.72%
QQQ	Invesco QQQ Trust	-712.26	66,004.52	-1.07%
XOP	SPDR S&P Oil & Gas Exploration & Production ETF	-547.18	3,142.11	-14.83%
ICF	iShares Cohen & Steers REIT ETF	-528.43	1,901.04	-21.75%
XLI	Industrial Select Sector SPDR Fund	-451.68	12,257.10	-3.55%
XLK	Technology Select Sector SPDR Fund	-435.56	20,490.91	-2.08%

ETF Weekly Flows By Asset Class

	Net Flows ($, mm)	AUM ($, mm)	% of AUM
U.S. Equity	1,951.31	2,076,683.81	0.09%
International Equity	318.61	759,588.89	0.04%
U.S. Fixed Income	-6,166.70	558,161.17	-1.10%
International Fixed Income	182.39	65,313.89	0.28%
Commodities	346.92	59,743.31	0.58%
Currency	7.45	1,096.91	0.68%
Leveraged	945.41	35,236.63	2.68%
Inverse	-350.50	13,602.24	-2.58%
Asset Allocation	14.90	9,196.07	0.16%
Alternatives	-147.90	4,983.71	-2.97%
Total:	-2,898.12	3,583,606.63	-0.08%

Asset Classes (Year-to-Date)

	Net Flows ($, mm)	AUM ($, mm)	% of AUM
U.S. Equity	99,712.50	2,076,683.81	4.80%
International Equity	38,044.66	759,588.89	5.01%
U.S. Fixed Income	52,289.81	558,161.17	9.37%
International Fixed Income	10,076.24	65,313.89	15.43%
Commodities	-1,221.81	59,743.31	-2.05%
Currency	-85.31	1,096.91	-7.78%
Leveraged	4,341.63	35,236.63	12.32%
Inverse	2,532.81	13,602.24	18.62%
Asset Allocation	684.33	9,196.07	7.44%
Alternatives	545.56	4,983.71	10.95%
Total:	206,920.44	3,583,606.63	5.77%

Top 10 Volume Surprises, Funds >$50 mm AUM

Ticker	Name	Average Volume (30 Day)	1 Week Average Volume	% of Average
AGGE	IQ Enhanced Core Bond U.S. ETF	44,504	298,609	670.96%
PSC	Principal U.S. Small-Cap Multi-Factor Index ETF	1,188	4,823	406.02%
ROBO	ROBO Global Robotics and Automation Index ETF	403,216	1,554,020	385.41%
QEFA	SPDR MSCI EAFE StrategicFactors ETF	30,566	116,290	380.45%
AGGP	IQ Enhanced Core Plus Bond U.S. ETF	126,992	471,678	371.42%
JPMB	JPMorgan USD Emerging Markets Sovereign Bond ETF	1,246	4,432	355.79%
ARCM	Arrow Reserve Capital Management ETF	101	353	351.19%
CLRG	IQ Chaikin U.S. Large Cap ETF	211,551	712,075	336.60%
XNTK	SPDR NYSE Technology ETF	26,208	84,478	322.34%
VMOT	Alpha Architect Value Momentum Trend ETF	20,130	62,329	309.64%

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

| Contact: [email protected]

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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Market Turmoil Spooks Bonds, Not Equities

Market Turmoil Spooks Bonds, Not Equities

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