$24B Stampedes Into US Equity ETFs

November 18, 2016

The post-election stampede into ETFs continued this week as investors remained in an optimistic mood following Donald Trump's victory. In aggregate, $16.2 billion flowed into U.S.-listed exchange-traded funds in the week ending Thursday, Nov. 17, according to FactSet. That comes on top of the $23.9 billion that came into ETFs last week. Year-to-date inflows now total $214.4 billion.

In contrast to last week, when ETFs across the board saw inflows, this week investors were almost exclsuively focused on U.S. stocks. ETFs related to U.S. equities had a whopping $24.1 billion worth of inflows in the period, as most of the major U.S. stock market indexes neared all-time highs. 

The Dow Jones industrial average hit a record 18,934 on Monday, while the S&P 500 rallied as high as 2,190 on Fridayjust a smidgen off its all-time best level of 2,193 from August. Meanwhile, the small-cap Russell 2000 powered to a record high of its own for the first time since June 2015 after rallying for 10-straight sessions through Thursday.

With all the bullish attention on U.S. stocks, investors shunned other types of ETFs. Tumbling bond prices (and surging interest rates)―as well as a spike to 14-year highs in the U.S. dollar―led investors to pull money out of everything from U.S. fixed-income ETFs to international equity ETFs.

In total, international equity ETFs had outflows of $2.1 billion during the week; U.S. fixed-income ETFs had outflows of $3.1 billion; international fixed-income ETFs had outflows of $706 million; and commodity ETFs had outflows of $1.5 billion. 

US Financials, Tech & Small-Caps In Vogue 
With the Russell 2000 hitting an all-time high for the first time in 17 months, it's no surprise that the iShares Russell 2000 ETF (IWM) had the largest inflows of any product, at $3.5 billion.

Following at the No. 2 position was the Financial Select Sector SPDR Fund (XLF), which garnered $2.7 billion worth of inflows on top of last week's $2.6 billion. Though the rally in the sector slowed this week, XLF's share price increased by about 1% week-over-week.

The Industrial Select Sector SPDR Fund (XLI) was another repeat-winner, with inflows of $1.2 billion. Some analysts believe Trump's anticipated infrastructure spending plan will benefit sectors such as industrials and materials. 

Meanwhile, on a percentage basis, the biggest winner on the top 10 inflows list was the First Trust Nasdaq-100 Technology Sector Index Fund (QTEC), with inflows of more than $700 million. Assets in the ETF nearly doubled in the past five trading sessions. After a rough week last week, large-cap tech stocks made a comeback, as investors reasoned that Trump's policies may not be as detrimental to the industry as feared. 

Treasurys, Gold & Emerging Markets Shunned
It's no surprise that on the outflows side, the biggest losers were related to Treasurys, gold and emerging markets. The iShares MSCI Emerging Markets ETF (EEM) was at the top of the losers heap, with outflows of $2.5 billion. The strong dollar and some of Trump's anticipated trade policies have weighed on emerging market equities.

For similar reasons, the iShares JP Morgan USD Emerging Markets Bond ETF (EMB) had outflows of more than $700 million during the week. A strong dollar makes servicing dollar-denominated debt more difficult for overseas borrowers.

Two gold ETFs found themselves on the outflows list. The SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU) had redemptions of $841 million and $643 million, respectively. Gold prices dropped to as low as $1,203 on Friday, the cheapest price since February.

The rest of this week's outflows list was dominated by various bond ETFs. The SPDR Barclays High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) each had outflows of more than $650 million; the iShares 1-3 Year Treasury Bond ETF (SHY) saw outflows of $609 million; and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) saw outflows of $430 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
IWM iShares Russell 2000 ETF 3,530.71 35,351.84 11.10%
XLF Financial Select Sector SPDR Fund 2,727.04 19,594.81 16.17%
SPY SPDR S&P 500 ETF Trust 2,277.41 210,943.08 1.09%
IVV iShares Core S&P 500 ETF 1,364.77 84,780.42 1.64%
XLI Industrial Select Sector SPDR Fund 1,247.66 9,560.77 15.01%
QQQ PowerShares QQQ Trust 1,245.21 40,152.39 3.20%
DIA SPDR Dow Jones Industrial Average ETF Trust 775.02 12,762.92 6.47%
IJR iShares Core S&P Small Cap ETF 751.25 23,649.86 3.28%
QTEC First Trust NASDAQ-100 Technology Sector Index Fund 701.36 1,425.68 96.83%
VTI Vanguard Total Stock Market Index Fund 675.46 66,584.09 1.02%

Top 10 Redemptions (All ETFs)

Ticker Name Net Flows ($,mm) AUM ($, mm) AUM % Change
EEM iShares MSCI Emerging Markets ETF -2,523.31 25,866.41 -8.89%
GLD SPDR Gold Trust -841.35 36,376.40 -2.26%
EMB iShares JP Morgan USD Emerging Markets Bond ETF -704.03 8,561.45 -7.60%
JNK SPDR Barclays High Yield Bond ETF -676.98 10,896.58 -5.85%
HYG iShares iBoxx $ High Yield Corporate Bond ETF -659.46 15,965.90 -3.97%
IAU iShares Gold Trust -642.83 8,256.03 -7.22%
FXD First Trust Consumer Discretionary AlphaDEX Fund -636.67 698.00 -47.70%
SHY iShares 1-3 Year Treasury Bond ETF -609.33 10,829.88 -5.33%
EFAV iShares MSCI EAFE Minimum Volatility ETF -513.33 6,942.59 -6.88%
LQD iShares iBoxx $ Investment Grade Corporate Bond ETF -429.63 29,449.24 -1.44%

ETF Weekly Flows By Asset Class

  Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity 24,080.13 1,374,695.08 1.75%
International Equity -2,075.70 488,644.76 -0.42%
U.S. Fixed Income -3,098.76 401,379.94 -0.77%
International Fixed Income -705.91 39,988.61 -1.77%
Commodities -1,515.86 68,427.16 -2.22%
Currency -12.26 3,215.63 -0.38%
Leveraged 390.12 23,900.64 1.63%
Inverse -712.01 19,170.73 -3.71%
Asset Allocation 6.95 6,319.45 0.11%
Alternatives -136.85 4,050.61 -3.38%
Total: 16,219.85 2,429,792.62 0.67%

Top 10 Volume Surprises, Funds >$50 mm AUM

Ticker Name Average Volume
(30 Day)
1 Week Average
Volume
% of Average
COMT iShares Commodities Select Strategy ETF 193,210 1,207,237 624.83%
HOLD AdvisorShares Sage Core Reserves ETF 6,121 25,373 414.53%
VNQI Vanguard Global ex-US Real Estate Index Fund 546,461 2,085,599 381.66%
SIZE iShares MSCI USA Size Factor ETF 8,070 40,898 506.81%
JKL iShares Morningstar Small Cap Value ETF 7,774 23,860 306.91%
RCD Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF 5,983 22,142 370.08%
MVV ProShares Ultra MidCap400 44,351 126,306 284.79%
UST ProShares Ultra 7-10 Year Treasury 21,291 88,395 415.18%
ONEY SPDR Russell 1000 Yield Focus 226 601 265.27%
ELD WisdomTree Emerging Markets Local Debt Fund 92,114 384,460 417.38%

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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