Market Turmoil Spooks Bonds, Not Equities

October 12, 2018

Tumultuous action in the stock and bond markets sent investors fleeing ETFs. The S&P 500 had its biggest drawdown since March this week, and the U.S. 10-year Treasury yield spiked to a seven-year high, prompting $2.9 billion to flow out of U.S.-listed ETFs.

Despite the stock market volatility—the S&P 500 fell as much as 7.8% from its all-time high—it wasn’t stocks that most ETF investors were dumping. In fact, almost $2 billion flowed into U.S. equity ETFs, according to the latest data from FactSet.

Conversely, a hefty $6.2 billion came out of U.S. fixed-income ETFs as the jump in Treasury yields spooked fixed-income investors out of their positions.

Corporate bond ETFs, in particular, fell swiftly out of favor. Funds like the iShares iBoxx USD High Yield Corporate Bond ETF (HYG), the SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD) had billions of dollars worth of outflows this week.

But not all fixed-income ETFs were shunned. The iShares 20+ Year Treasury Bond ETF (TLT) and the SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) actually found themselves on the top inflows list for the week, as some investors used the bond sell-off to lock in higher rates.

Meanwhile, on the equity side, the SPDR S&P 500 ETF Trust (SPY), the Vanguard S&P 500 ETF Trust (VOO), the iShares MSCI Japan ETF (EWJ) and the J.P. Morgan Alerian MLP Index ETN (AMJ) had the largest inflows during the week.

Though stocks fell notably this week, the data suggest that ETF investors weren’t panicking; on the contrary, they used the pullback as an opportunity to buy.

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
SPY SPDR S&P 500 ETF Trust 5,653.29 273,776.35 2.11%
VOO Vanguard S&P 500 ETF 1,187.29 101,320.90 1.19%
DIA SPDR Dow Jones Industrial Average ETF Trust 684.41 22,862.87 3.09%
TLT iShares 20+ Year Treasury Bond ETF 586.93 8,423.42 7.49%
EWJ iShares MSCI Japan ETF 567.26 17,360.20 3.38%
TQQQ ProShares UltraPro QQQ 519.05 3,812.85 15.76%
AMJ J.P. Morgan Alerian MLP Index ETN 511.40 3,793.36 15.58%
XLC Communication Services Select Sector SPDR Fund 491.38 2,766.51 21.60%
BIL SPDR Bloomberg Barclays 1-3 Month T-Bill ETF 466.48 4,010.65 13.16%
IXUS iShares Core MSCI Total International Stock ETF 411.84 10,887.39 3.93%

Top 10 Redemptions (All ETFs)

Ticker Name Net Flows ($,mm) AUM ($, mm) AUM % Change
HYG iShares iBoxx USD High Yield Corporate Bond ETF -2,756.16 13,051.40 -17.44%
IWB iShares Russell 1000 ETF -2,754.04 17,631.66 -13.51%
AGG iShares Core U.S. Aggregate Bond ETF -2,193.77 53,189.39 -3.96%
JNK SPDR Bloomberg Barclays High Yield Bond ETF -1,333.43 8,003.89 -14.28%
LQD iShares iBoxx USD Investment Grade Corporate Bond ETF -1,243.01 32,192.09 -3.72%
QQQ Invesco QQQ Trust -712.26 66,004.52 -1.07%
XOP SPDR S&P Oil & Gas Exploration & Production ETF -547.18 3,142.11 -14.83%
ICF iShares Cohen & Steers REIT ETF -528.43 1,901.04 -21.75%
XLI Industrial Select Sector SPDR Fund -451.68 12,257.10 -3.55%
XLK Technology Select Sector SPDR Fund -435.56 20,490.91 -2.08%

ETF Weekly Flows By Asset Class

  Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity 1,951.31 2,076,683.81 0.09%
International Equity 318.61 759,588.89 0.04%
U.S. Fixed Income -6,166.70 558,161.17 -1.10%
International Fixed Income 182.39 65,313.89 0.28%
Commodities  346.92 59,743.31 0.58%
Currency 7.45 1,096.91 0.68%
Leveraged 945.41 35,236.63 2.68%
Inverse -350.50 13,602.24 -2.58%
Asset Allocation 14.90 9,196.07 0.16%
Alternatives -147.90 4,983.71 -2.97%
Total: -2,898.12 3,583,606.63 -0.08%

Asset Classes (Year-to-Date)

  Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity 99,712.50 2,076,683.81 4.80%
International Equity 38,044.66 759,588.89 5.01%
U.S. Fixed Income 52,289.81 558,161.17 9.37%
International Fixed Income 10,076.24 65,313.89 15.43%
Commodities  -1,221.81 59,743.31 -2.05%
Currency -85.31 1,096.91 -7.78%
Leveraged 4,341.63 35,236.63 12.32%
Inverse 2,532.81 13,602.24 18.62%
Asset Allocation 684.33 9,196.07 7.44%
Alternatives 545.56 4,983.71 10.95%
Total: 206,920.44 3,583,606.63 5.77%

Top 10 Volume Surprises, Funds >$50 mm AUM

Ticker Name Average Volume
(30 Day)
1 Week Average
Volume
% of Average
AGGE IQ Enhanced Core Bond U.S. ETF 44,504 298,609 670.96%
PSC Principal U.S. Small-Cap Multi-Factor Index ETF 1,188 4,823 406.02%
ROBO ROBO Global Robotics and Automation Index ETF 403,216 1,554,020 385.41%
QEFA SPDR MSCI EAFE StrategicFactors ETF 30,566 116,290 380.45%
AGGP IQ Enhanced Core Plus Bond U.S. ETF 126,992 471,678 371.42%
JPMB JPMorgan USD Emerging Markets Sovereign Bond ETF 1,246 4,432 355.79%
ARCM Arrow Reserve Capital Management ETF 101 353 351.19%
CLRG IQ Chaikin U.S. Large Cap ETF 211,551 712,075 336.60%
XNTK SPDR NYSE Technology ETF 26,208 84,478 322.34%
VMOT Alpha Architect Value Momentum Trend ETF 20,130 62,329 309.64%

 

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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