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.
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 $1.6 billion from each of them.
For a full list of this week’s top inflows and outflows, see the tables below:
Top 10 Creations (All ETFs)
| Ticker | Name | Net Flows ($,mm) | AUM ($, mm) | AUM % Change |
| IWM | iShares Russell 2000 ETF | 1,421.66 | 50,494.46 | 2.90% |
| HYG | iShares iBoxx USD High Yield Corporate Bond ETF | 1,325.21 | 16,019.79 | 9.02% |
| DIA | SPDR Dow Jones Industrial Average ETF Trust | 839.13 | 23,251.16 | 3.74% |
| FBT | First Trust NYSE Arca Biotechnology Index Fund | 793.21 | 3,449.67 | 29.86% |
| IVV | iShares Core S&P 500 ETF | 764.16 | 166,551.52 | 0.46% |
| IEFA | iShares Core MSCI EAFE ETF | 667.28 | 59,495.81 | 1.13% |
| VEA | Vanguard FTSE Developed Markets ETF | 602.98 | 71,373.30 | 0.85% |
| XLC | Communication Services Select Sector SPDR Fund | 587.22 | 2,462.48 | 31.31% |
| MTUM | iShares Edge MSCI U.S.A. Momentum Factor ETF | 512.17 | 11,035.12 | 4.87% |
| XLI | Industrial Select Sector SPDR Fund | 431.31 | 13,430.94 | 3.32% |
Top 10 Redemptions (All ETFs)
| Ticker | Name | Net Flows ($,mm) | AUM ($, mm) | AUM % Change |
| QQQ | Invesco QQQ Trust | -1,673.44 | 72,224.95 | -2.26% |
| TLT | iShares 20+ Year Treasury Bond ETF | -1,598.27 | 7,944.25 | -16.75% |
| FTXO | First Trust Nasdaq Bank ETF | -828.58 | 366.14 | -69.35% |
| IYR | iShares U.S. Real Estate ETF | -690.36 | 3,781.98 | -15.44% |
| XLY | Consumer Discretionary Select Sector SPDR Fund | -541.05 | 15,367.77 | -3.40% |
| VO | Vanguard Mid-Cap ETF | -504.00 | 24,512.03 | -2.01% |
| TIP | iShares TIPS Bond ETF | -452.41 | 23,265.62 | -1.91% |
| XLV | Health Care Select Sector SPDR Fund | -431.38 | 19,611.35 | -2.15% |
| GLD | SPDR Gold Trust | -408.07 | 28,245.26 | -1.42% |
| IEF | iShares 7-10 Year Treasury Bond ETF | -332.62 | 8,686.07 | -3.69% |
ETF Weekly Flows By Asset Class
| Net Flows ($, mm) | AUM ($, mm) | % of AUM | |
| U.S. Equity | 2,331.41 | 2,179,625.39 | 0.11% |
| International Equity | 2,032.42 | 792,215.37 | 0.26% |
| U.S. Fixed Income | 742.77 | 566,885.83 | 0.13% |
| International Fixed Income | 477.94 | 65,619.63 | 0.73% |
| Commodities | -219.21 | 60,360.11 | -0.36% |
| Currency | -0.00 | 1,089.12 | -0.00% |
| Leveraged | 123.65 | 38,222.59 | 0.32% |
| Inverse | 273.14 | 13,079.65 | 2.09% |
| Asset Allocation | -15.52 | 9,471.65 | -0.16% |
| Alternatives | -50.26 | 4,780.83 | -1.05% |
| Total: | 5,696.35 | 3,731,350.17 | 0.15% |
Asset Classes (Year-to-Date)
| Net Flows ($, mm) | AUM ($, mm) | % of AUM | |
| U.S. Equity | 97,811.58 | 2,179,625.39 | 4.49% |
| International Equity | 37,724.05 | 792,215.37 | 4.76% |
| U.S. Fixed Income | 58,457.77 | 566,885.83 | 10.31% |
| International Fixed Income | 9,893.85 | 65,619.63 | 15.08% |
| Commodities | -1,568.58 | 60,360.11 | -2.60% |
| Currency | -92.76 | 1,089.12 | -8.52% |
| Leveraged | 3,396.22 | 38,222.59 | 8.89% |
| Inverse | 2,883.32 | 13,079.65 | 22.04% |
| Asset Allocation | 666.87 | 9,471.65 | 7.04% |
| Alternatives | 693.46 | 4,780.83 | 14.51% |
| Total: | 209,865.79 | 3,731,350.17 | 5.62% |
Top 10 Volume Surprises, Funds >$50 mm AUM
| Ticker | Name | Average Volume (30 Day) | 1 Week Average Volume | % of Average |
| QVAL | Alpha Architect U.S. Quantitative Value ETF | 11,312 | 53,619 | 474.02% |
| IMTB | iShares Core 5-10 Year USD Bond ETF | 13,596 | 60,444 | 444.57% |
| WOOD | iShares Global Timber & Forestry ETF | 31,415 | 122,302 | 389.30% |
| AGZ | iShares Agency Bond ETF | 16,386 | 53,627 | 327.27% |
| JPMF | JPMorgan Managed Futures Strategy ETF | 1,168 | 3,462 | 296.28% |
| DVP | Deep Value ETF | 16,606 | 46,637 | 280.84% |
| FALN | iShares Fallen Angels USD Bond ETF | 17,189 | 45,720 | 265.99% |
| DVYE | iShares Emerging Markets Dividend ETF | 81,103 | 213,245 | 262.93% |
| PXLV | Invesco Russell Top 200 Pure Value ETF | 17,050 | 41,862 | 245.53% |
| HTRB | Hartford Total Return Bond ETF | 242 | 561 | 231.89% |
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.
