Nearly $6B Flows Into ETFs Despite Interest Rate Head Winds

Oct 28, 2016

Reviewed by: etf.com Staff

Edited by: etf.com Staff

A sell-off in bonds and stagnant stock prices didn't dissuade investors from pouring money into U.S.-listed ETFs. According to FactSet, $5.9 billion in total entered ETFs in the week ending Thursday, Oct. 27, with $4.5 billion of that going into U.S. equity ETFs.

The latest flows bolster what has already been a great month for inflows into U.S.-listed ETFs. Early estimates have total inflows for the month of October at nearly $20 billion.

Though U.S. equities were the most popular, other asset classes also saw inflows in the latest week. International equity ETFs had inflows of $1.3 billion; U.S. fixed-income ETFs had inflows of $200 million; and international fixed-income ETFs had inflows of $350 million.

On the other hand, commodity ETFs saw outflows in excess of $950 million, largely due to one fund.

VXX, TIP & PFF Garner Inflows

Most of this week's inflows went into large-cap funds such as the PowerShares QQQ Trust (QQQ) and the SPDR S&P 500 ETF (SPY), with inflows of more than $1.7 billion each.

More interestingly, the iPath S&P 500 VIX Short-Term Futures ETN (VXX) garnered inflows just shy of $500 million, equal to 37% of its assets under management. Stock market volatility has been subdued recently as investors gear up for the U.S. presidential election and a potential Fed rate hike later this year.

Meanwhile, the iShares TIPS Bond ETF (TIP) and the iShares Preferred Stock ETF (PFF) were two fixed-income winners in a week in which interest rates jumped notably. TIP had inflows of more than $300 million, while PFF had inflows of more than $260 million.

Week-over-week, the benchmark U.S. 10-year Treasury yield increased from 1.73% to 1.85%, the highest level since May.

GLD, LQD & HYG Lead Outflows

On the outflows side, the most noteworthy loser was the SPDR Gold Trust (GLD), with redemptions totaling more than $1.1 billion. Presumably, the spike in interest rates this week reduced the appeal of zero-yielding gold, which is seen by many as an alternative safe-haven to government bonds.

The interest rate rise also prompted investors to cash in on a number of fixed-income ETFs. The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) had outflows of $608 million and $426 million, respectively.

Three Treasury ETFs also made the top weekly outflows list, including the iShares 1-3 Year Treasury Bond ETF (SHY), the iShares 3-7 Year Treasury Bond ETF (IEI) and the iShares 20+ Year Treasury Bond ETF (TLT), each with redemptions of more than $200 million.

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
QQQ	PowerShares QQQ Trust	1,754.94	40,695.88	4.51%
SPY	SPDR S&P 500 ETF Trust	1,709.87	196,366.56	0.88%
IVV	iShares Core S&P 500 ETF	538.30	80,258.30	0.68%
VEA	Vanguard FTSE Developed Markets ETF	495.99	37,321.86	1.35%
VXX	iPath S&P 500 VIX Short-Term Futures ETN	492.89	1,818.52	37.18%
TIP	iShares TIPS Bond ETF	313.12	19,586.57	1.62%
IEFA	iShares Core MSCI EAFE ETF	269.95	13,702.51	2.01%
PFF	iShares U.S. Preferred Stock ETF	261.76	18,100.70	1.47%
XLU	Utilities Select Sector SPDR Fund	259.85	7,489.88	3.59%
DIA	SPDR Dow Jones Industrial Average ETF Trust	255.44	11,839.27	2.21%

Top 10 Redemptions (All ETFs)

Ticker	Name	Net Flows ($,mm)	AUM ($, mm)	AUM % Change
IWM	iShares Russell 2000 ETF	-1,222.01	27,426.17	-4.27%
GLD	SPDR Gold Trust	-1,127.44	38,491.58	-2.85%
LQD	iShares iBoxx $ Investment Grade Corporate Bond ETF	-607.91	32,400.30	-1.84%
XLP	Consumer Staples Select Sector SPDR Fund	-540.08	8,146.23	-6.22%
HYG	iShares iBoxx $ High Yield Corporate Bond ETF	-426.43	18,064.80	-2.31%
SHY	iShares 1-3 Year Treasury Bond ETF	-254.67	10,667.95	-2.33%
IEI	iShares 3-7 Year Treasury Bond ETF	-251.72	6,169.69	-3.92%
XLV	Health Care Select Sector SPDR Fund	-246.78	11,629.32	-2.08%
IWD	iShares Russell 1000 Value ETF	-244.90	30,995.27	-0.78%
TLT	iShares 20+ Year Treasury Bond ETF	-239.03	6,347.77	-3.63%

ETF Weekly Flows By Asset Class

	Net Flows ($, mm)	AUM ($, mm)	% of AUM
U.S. Equity	4,467.02	1,313,324.32	0.34%
International Equity	1,270.70	508,924.68	0.25%
U.S. Fixed Income	205.49	414,195.68	0.05%
International Fixed Income	348.81	42,003.39	0.83%
Commodities	-953.06	71,694.88	-1.33%
Currency	65.46	3,274.66	2.00%
Leveraged	292.43	23,943.39	1.22%
Inverse	-311.94	20,149.64	-1.55%
Asset Allocation	15.35	6,449.86	0.24%
Alternatives	488.41	4,466.70	10.93%
Total:	5,888.68	2,408,427.21	0.24%

Top 10 Volume Surprises, Funds >$50 mm AUM

Ticker	Name	Average Volume (30 Day)	1 Week Average Volume	% of Average
FLQE		1,187	3,130	263.76%
FTHI	First Trust High Income ETF	3,388	10,191	300.76%
SCHO	Schwab Short-Term US Treasury ETF	179,084	548,826	306.46%
MNA	IQ Merger Arbitrage ETF	24,581	52,704	214.41%
RTM	Guggenheim S&P 500 Equal Weight Materials ETF	22,037	38,477	174.60%
SMB	VanEck Vectors AMT-Free Short Municipal Index ETF	81,485	154,377	189.45%
DXJS	WisdomTree Japan Hedged SmallCap Equity Fund	18,170	38,723	213.12%
IXC	iShares Global Energy ETF	315,375	528,810	167.68%
VLUE	iShares MSCI USA Value Factor ETF	219,933	580,104	263.76%
IHI	iShares U.S. Medical Devices ETF	132,812	219,902	165.57%

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.

etf.com Staff

| Contact: [email protected]

etf.com is the single source for ETF intelligence. We provide real-time ETF news and analysis to educate investors and drive financial knowledge in the space. Our personalized and accurate information, alongside industry-leading financial tools, are depended upon to develop winning investment and financial decisions. At etf.com, we strive to serve both the individual investor as well as the professional financial advisor to educate and grow the ETF community.

View Bio Follow Author