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.
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.
