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

Investors favored U.S. equity ETFs in the latest week, while shunning gold and certain fixed-income products.

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Reviewed by: etf.com Staff
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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)

TickerNameNet Flows ($,mm)AUM ($, mm)AUM % Change
QQQPowerShares QQQ Trust1,754.9440,695.884.51%
SPYSPDR S&P 500 ETF Trust1,709.87196,366.560.88%
IVViShares Core S&P 500 ETF538.3080,258.300.68%
VEAVanguard FTSE Developed Markets ETF495.9937,321.861.35%
VXXiPath S&P 500 VIX Short-Term Futures ETN492.891,818.5237.18%
TIPiShares TIPS Bond ETF313.1219,586.571.62%
IEFAiShares Core MSCI EAFE ETF269.9513,702.512.01%
PFFiShares U.S. Preferred Stock ETF261.7618,100.701.47%
XLUUtilities Select Sector SPDR Fund259.857,489.883.59%
DIASPDR Dow Jones Industrial Average ETF Trust255.4411,839.272.21%

Top 10 Redemptions (All ETFs)

TickerNameNet Flows ($,mm)AUM ($, mm)AUM % Change
IWMiShares Russell 2000 ETF-1,222.0127,426.17-4.27%
GLDSPDR Gold Trust-1,127.4438,491.58-2.85%
LQDiShares iBoxx $ Investment Grade Corporate Bond ETF-607.9132,400.30-1.84%
XLPConsumer Staples Select Sector SPDR Fund-540.088,146.23-6.22%
HYGiShares iBoxx $ High Yield Corporate Bond ETF-426.4318,064.80-2.31%
SHYiShares 1-3 Year Treasury Bond ETF-254.6710,667.95-2.33%
IEIiShares 3-7 Year Treasury Bond ETF-251.726,169.69-3.92%
XLVHealth Care Select Sector SPDR Fund-246.7811,629.32-2.08%
IWDiShares Russell 1000 Value ETF-244.9030,995.27-0.78%
TLTiShares 20+ Year Treasury Bond ETF-239.036,347.77-3.63%

ETF Weekly Flows By Asset Class

 Net Flows ($, mm)AUM ($, mm)% of AUM
U.S. Equity4,467.021,313,324.320.34%
International Equity1,270.70508,924.680.25%
U.S. Fixed Income205.49414,195.680.05%
International Fixed Income348.8142,003.390.83%
Commodities-953.0671,694.88-1.33%
Currency65.463,274.662.00%
Leveraged292.4323,943.391.22%
Inverse-311.9420,149.64-1.55%
Asset Allocation15.356,449.860.24%
Alternatives488.414,466.7010.93%
Total:5,888.682,408,427.210.24%

Top 10 Volume Surprises, Funds >$50 mm AUM

TickerNameAverage Volume
(30 Day)
1 Week Average
Volume
% of Average
FLQE 1,1873,130263.76%
FTHIFirst Trust High Income ETF3,38810,191300.76%
SCHOSchwab Short-Term US Treasury ETF179,084548,826306.46%
MNAIQ Merger Arbitrage ETF24,58152,704214.41%
RTMGuggenheim S&P 500 Equal Weight Materials ETF22,03738,477174.60%
SMBVanEck Vectors AMT-Free Short Municipal Index ETF81,485154,377189.45%
DXJSWisdomTree Japan Hedged SmallCap Equity Fund18,17038,723213.12%
IXCiShares Global Energy ETF315,375528,810167.68%
VLUEiShares MSCI USA Value Factor ETF219,933580,104263.76%
IHIiShares U.S. Medical Devices ETF132,812219,902165.57%

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.

 

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