Surging Rates Don't Deter ETF Investors

Investors added $5.7 billion to U.S.-listed ETFs, even as interest rates in the U.S. spiked to multiyear highs.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

ETF inflows continued at a brisk pace during the first week of October. On net, $5.7 billion entered U.S.-listed ETFs during the week ending Thursday, Oct. 4, according to FactSet. Year-to-date inflows now stand at just shy of $210 billion.

Unlike previous weeks, when U.S. equity ETFs took in the lion’s share of new money, inflows were more evenly split this time around. U.S. equity ETFs picked up a solid $2.3 billion, but international equity ETFs also had respectable inflows of $2 billion.

Even U.S. and international fixed-income ETFs registered a combined $1.2 billion of inflows despite surging interest rates. The benchmark 10-year Treasury yield hit a seven-year high of 3.25% this week thanks to strong economic data.

Bargain Buying In Small Caps & Junks Bonds

Taking the No. 1 spot on the daily inflows list was the iShares Russell 2000 ETF (IWM), with creations of $1.4 billion. Small-caps notably underperformed their large-cap counterparts this week, which may have prompted bargain buyers to pick up shares of IWM.

IWM is currently up 7.4% year-to-date, compared with 9.4% for competing S&P 500 funds.

Similarly, the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) sold off as interest rates hit multiyear highs this week; nevertheless, investors poured $1.3 billion into the fund.

On the other hand, the Invesco QQQ Trust (QQQ) and the iShares 20+ Year Treasury Bond ETF (TLT) weren’t so fortunate. Investors soured on both the tech-heavy equity ETF and the long-term Treasury bond ETF, pulling about $1.6 billion from each of them.

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
IWMiShares Russell 2000 ETF1,421.6650,494.462.90%
HYGiShares iBoxx USD High Yield Corporate Bond ETF1,325.2116,019.799.02%
DIASPDR Dow Jones Industrial Average ETF Trust839.1323,251.163.74%
FBTFirst Trust NYSE Arca Biotechnology Index Fund793.213,449.6729.86%
IVViShares Core S&P 500 ETF764.16166,551.520.46%
IEFAiShares Core MSCI EAFE ETF667.2859,495.811.13%
VEAVanguard FTSE Developed Markets ETF602.9871,373.300.85%
XLCCommunication Services Select Sector SPDR Fund587.222,462.4831.31%
MTUMiShares Edge MSCI U.S.A. Momentum Factor ETF512.1711,035.124.87%
XLIIndustrial Select Sector SPDR Fund431.3113,430.943.32%

Top 10 Redemptions (All ETFs)

TickerNameNet Flows ($,mm)AUM ($, mm)AUM % Change
QQQInvesco QQQ Trust-1,673.4472,224.95-2.26%
TLTiShares 20+ Year Treasury Bond ETF-1,598.277,944.25-16.75%
FTXOFirst Trust Nasdaq Bank ETF-828.58366.14-69.35%
IYRiShares U.S. Real Estate ETF-690.363,781.98-15.44%
XLYConsumer Discretionary Select Sector SPDR Fund-541.0515,367.77-3.40%
VOVanguard Mid-Cap ETF-504.0024,512.03-2.01%
TIPiShares TIPS Bond ETF-452.4123,265.62-1.91%
XLVHealth Care Select Sector SPDR Fund-431.3819,611.35-2.15%
GLDSPDR Gold Trust-408.0728,245.26-1.42%
IEFiShares 7-10 Year Treasury Bond ETF-332.628,686.07-3.69%

ETF Weekly Flows By Asset Class

 Net Flows ($, mm)AUM ($, mm)% of AUM
U.S. Equity2,331.412,179,625.390.11%
International Equity2,032.42792,215.370.26%
U.S. Fixed Income742.77566,885.830.13%
International Fixed Income477.9465,619.630.73%
Commodities -219.2160,360.11-0.36%
Currency-0.001,089.12-0.00%
Leveraged123.6538,222.590.32%
Inverse273.1413,079.652.09%
Asset Allocation-15.529,471.65-0.16%
Alternatives-50.264,780.83-1.05%
Total:5,696.353,731,350.170.15%

Asset Classes (Year-to-Date)

 Net Flows ($, mm)AUM ($, mm)% of AUM
U.S. Equity97,811.582,179,625.394.49%
International Equity37,724.05792,215.374.76%
U.S. Fixed Income58,457.77566,885.8310.31%
International Fixed Income9,893.8565,619.6315.08%
Commodities -1,568.5860,360.11-2.60%
Currency-92.761,089.12-8.52%
Leveraged3,396.2238,222.598.89%
Inverse2,883.3213,079.6522.04%
Asset Allocation666.879,471.657.04%
Alternatives693.464,780.8314.51%
Total:209,865.793,731,350.175.62%

Top 10 Volume Surprises, Funds >$50 mm AUM

TickerNameAverage Volume
(30 Day)
1 Week Average
Volume
% of Average
QVALAlpha Architect U.S. Quantitative Value ETF11,31253,619474.02%
IMTBiShares Core 5-10 Year USD Bond ETF13,59660,444444.57%
WOODiShares Global Timber & Forestry ETF31,415122,302389.30%
AGZiShares Agency Bond ETF16,38653,627327.27%
JPMFJPMorgan Managed Futures Strategy ETF1,1683,462296.28%
DVPDeep Value ETF16,60646,637280.84%
FALNiShares Fallen Angels USD Bond ETF17,18945,720265.99%
DVYEiShares Emerging Markets Dividend ETF81,103213,245262.93%
PXLVInvesco Russell Top 200 Pure Value ETF17,05041,862245.53%
HTRBHartford Total Return Bond ETF242561231.89%

 

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 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.