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

October 28, 2016

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.

 

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