Dovish Fed Spurs $18B Into ETFs

November 30, 2018

Encouraging news from the Fed and Washington kindled animal spirits this week as investors added nearly $18 billion of new money into U.S.-listed ETFs. A cool $10.3 billion flowed into U.S. equity ETFs; $4.3 billion went into international equity ETFs; and $2.8 billion entered U.S. fixed-income ETFs, during the week ending Thursday, Nov. 29.

The data, which come from FactSet, also showed year-to-date inflows for ETFs climbed to $258.5 billion.

Stocks Bolstered By Dovish Fed

Perhaps the biggest news on the week came on Wednesday, when Fed Chairman Jerome Powell said that interest rates were “just below” neutral—the level which neither restricts nor stimulates economic growth.

The comments were a sharp reversal from what the Fed chair said in early October, when he remarked that rates were “a long way” from neutral, setting off a big sell-off on Wall Street. The latest comments had the opposite effect: The S&P 500 soared 2.3% on Wednesday alone.

Bolstered by a more dovish Fed, investors happily added to their positions in U.S. equities. The SPDR S&P 500 ETF Trust (SPY), the iShares Edge MSCI Min Vol U.S.A. ETF (USMV) and the iShares Russell 2000 ETF (IWM) were among the biggest flows winners of the week.

At the same time, the iShares Core MSCI Emerging Markets ETF (IEMG) saw the largest inflows among international equity ETFs. Hopes that the U.S. and China might reach a trade deal this weekend at the G-20 summit on Argentina have, at least temporarily, brightened the prospects for emerging markets.

Corporate Bonds Shunned

On the flip side, investors continued to shun riskier bonds this week. Though short-term Treasury ETFs, like the iShares 1-3 Year Treasury Bond ETF (SHY) and the iShares Short Treasury Bond ETF (SHV) registered hefty inflows, corporate bond ETFs such as the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD), the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) and the Invesco Senior Loan ETF (BKLN) were hit with outflows.

Prices for BKLN dipped to a 2 ½-year low on Thursday.

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 2,443.35 265,046.44 0.92%
IEMG iShares Core MSCI Emerging Markets ETF 1,350.19 49,770.10 2.71%
SHY iShares 1-3 Year Treasury Bond ETF 956.06 17,095.71 5.59%
USMV iShares Edge MSCI Min Vol U.S.A. ETF 767.92 19,192.26 4.00%
SHV iShares Short Treasury Bond ETF 684.44 17,303.33 3.96%
IWM iShares Russell 2000 ETF 678.02 45,719.77 1.48%
TLT iShares 20+ Year Treasury Bond ETF 539.48 7,526.35 7.17%
VXF Vanguard Extended Market ETF 536.73 6,842.83 7.84%
XLP Consumer Staples Select Sector SPDR Fund 520.66 10,190.41 5.11%
IWD iShares Russell 1000 Value ETF 511.41 38,881.50 1.32%

Top 10 Redemptions (All ETFs)

Ticker Name Net Flows ($,mm) AUM ($, mm) AUM % Change
LQD iShares iBoxx USD Investment Grade Corporate Bond ETF -593.15 29,873.49 -1.99%
HYG iShares iBoxx USD High Yield Corporate Bond ETF -331.93 14,037.15 -2.36%
AGG iShares Core U.S. Aggregate Bond ETF -293.39 53,533.79 -0.55%
BKLN Invesco Senior Loan ETF -282.36 6,112.61 -4.62%
DIA SPDR Dow Jones Industrial Average ETF Trust -268.05 21,996.72 -1.22%
IYR iShares U.S. Real Estate ETF -203.68 3,502.32 -5.82%
SHYG iShares 0-5 Year High Yield Corporate Bond ETF -178.30 2,843.51 -6.27%
KRE SPDR S&P Regional Banking ETF -172.70 3,991.09 -4.33%
UNG United States Natural Gas Fund LP -171.83 387.21 -44.38%
EWQ iShares MSCI France ETF -150.84 594.56 -25.37%

ETF Weekly Flows By Asset Class

  Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity 10,282.96 2,065,814.30 0.50%
International Equity 4,288.40 758,550.06 0.57%
U.S. Fixed Income 2,726.36 571,183.67 0.48%
International Fixed Income 379.99 66,322.83 0.57%
Commodities  -248.12 59,381.53 -0.42%
Currency 16.02 1,131.15 1.42%
Leveraged 221.74 35,185.83 0.63%
Inverse -28.67 12,765.02 -0.22%
Asset Allocation 43.00 9,037.74 0.48%
Alternatives 263.40 4,859.87 5.42%
Total: 17,945.08 3,584,232.00 0.50%

Asset Classes (Year-to-Date)

  Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity 116,178.91 2,065,814.30 5.62%
International Equity 52,202.02 758,550.06 6.88%
U.S. Fixed Income 68,511.43 571,183.67 11.99%
International Fixed Income 11,553.59 66,322.83 17.42%
Commodities  -527.00 59,381.53 -0.89%
Currency -33.84 1,131.15 -2.99%
Leveraged 7,293.22 35,185.83 20.73%
Inverse 1,996.28 12,765.02 15.64%
Asset Allocation 806.58 9,037.74 8.92%
Alternatives 494.14 4,859.87 10.17%
Total: 258,475.33 3,584,232.00 7.21%

Top 10 Volume Surprises, Funds >$50 mm AUM

Ticker Name Average Volume
(30 Day)
1 Week Average
Volume
% of Average
TDTF FlexShares iBoxx 5 Year Target Duration TIPS Index Fund 191,790 809,773 422.22%
BCI Aberdeen Standard Bloomberg All Commodity Strategy K-1 Free ETF 73,687 285,784 387.83%
CVY Invesco Zacks Multi-Asset Income ETF 45,211 151,651 335.43%
ESGV Vanguard ESG U.S. Stock ETF 46,579 154,732 332.19%
KNOW Direxion All Cap Insider Sentiment Shares 45,403 139,469 307.18%
CMBS iShares CMBS ETF 27,189 82,870 304.79%
VRP Invesco Variable Rate Preferred ETF 641,664 1,600,033 249.36%
DEUS Xtrackers Russell 1000 Comprehensive Factor ETF 46,346 113,978 245.93%
RBIN Nationwide Risk-Based International Equity ETF 514 1,200 233.57%
RBUS Nationwide Risk-Based U.S. Equity ETF 217 381 175.82%

 

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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