2013 ETF Asset-Gathering Now Lags 2012’s

ETF.com

 

(The following story contains corrected data detailing second-quarter flows in both the body of the story and in the final table.)


Record ETF outflows of $12 billion in June—led by bond funds, emerging market equities and gold, and related to a changing interest-rate outlook—have called into question previous predictions that this year's inflows would shatter the 2012 asset-gathering record of $188 billion.

Total creations for 2013 through the first half totaled about $73 billion, compared with $76 billion in the first half of last year, marking the first time this year that current-year asset-gathering has lagged 2012's pace, according to data compiled by IndexUniverse.

Total U.S.-listed ETF assets of $1.438 trillion have risen 6.6 percent so far this year, and are up by more than 20 percent from the end of 2012's first half, putting the month-on-month asset slide of more than 5 percent into useful perspective. Developed-market equities, including those focused on the United States, Japan and Germany, were among the brighter spots to which assets gravitated.

That said, the January to June period was the market's best first-half-performance period since 1999 amid growing optimism in the Federal Reserve and elsewhere that the U.S. economy might finally really be climbing out of the worst downturn since the Great Depression. But the market's gains came in the first five months of 2013.

The record outflows in June underscore the sudden surge of anxiety among investors about the Fed beginning to signal the end of five years of extraordinarily loose monetary policy. Moreover, market sources say the "ETF ecosystem" is likely to continue to reflect the choppy manner in which financial markets adjust to the prospect of the end of zero percent interest rates and of quantitative easing.

"Shorten duration, and get into reliable parts of the market like U.S. equities," Nicholas Colas, chief strategist with the trading technology firm ConvergEx Group said in an interview, summarizing what he reckoned many investors must be thinking these days as they seek to protect their portfolios from the changes in the outlook.

Gold, Bonds and Developing Markets

No one asset class is more emblematic of changing sentiments in financial markets than gold, and the SPDR Gold Shares (GLD), the world's biggest gold bullion ETF, is the perfect canary in the coal mine. Assets in the huge fund fell by almost half to $37 billion, the result of a 26 percent slide in price and outflows of more than $18 billion, making it the most unpopular ETF in the first half of 2013. It was also the least popular ETF in the second quarter, when it lost $11.6 billion in assets.

GLD dropped to the fifth-biggest ETF after ending May the third-biggest and ending last year the second-biggest. GLD's fortunes are also intimating the possibility of its sponsor, State Street Global Advisors, losing its place as the second-biggest U.S. sponsor. Vanguard is the No. 3 sponsor, but the asset gap has narrowed to $57 billion at the end of June from $85 billion at the end of last year.

 

 

Investors seem more and more convinced that the predicted inflation caused by the Fed's quantitative easing wasn't going to materialize quickly the way so many had predicted and, moreover, that the worst of the financial crisis of 2008-2009 is history—effectively neutralizing two of the main reasons investors buy gold.

“In the end, gold is a hedge against inflation, and QE hasn’t resulted in any inflation,” said Sumit Roy, a commodities analyst and managing editor of HardAssetsInvestor.com (HAI).

Movement out of emerging markets was another other theme that was in sharp focus, given the changing interest-rate outlook.

The iShares MSCI Emerging Markets Index Fund (EEM) was the least popular ETF in the month of June , recording redemptions of $3.84 billion, and it was right behind GLD in both the second quarter and the first half, with outflows of $6.77 billion and $8 billion, respectively.

The Vanguard FTSE Emerging Markets ETF (VWO) followed EEM in the second quarter, bleeding $3.64 billion in assets.

After VWO's No. 3 spot in the April-to-June quarter outflows list, a broad range of bond funds followed, beginning with the iShares Barclays TIPS Bond Fund (TIP), which lost almost $3.45 billion in the quarter.

The iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD) and the SPDR Barclays High Yield Bond ETF (JNK) were in Nos. 5 and 6 slots, with outflows of $3 billion and $2.3 billion, respectively, in two clear examples of some investors stepping away from so-called spread debt markets for fear of suffering capital losses should the Fed's tightening measures get underway.

Developed-Market Equities Shine

As Nick Colas of ConvergEx suggested, investors were focusing on developed-market equities.

In the month of June, U.S. equities were one of the bright spots, pulling in upward of $5 billion in fresh investment,

The most popular fund in the month was the iShares MSCI Germany Index Fund (EWG), which attracted $1.18 billion, or around a quarter of the fund's assets.

In the entire first half, the most popular ETF was the WisdomTree Japan Hedged Equity Fund (DXJ)—already well known as the biggest blockbuster of the year. DXJ added an industry-leading $8 billion in assets, helped by Japan's plan to boost exports by weakening the yen versus the dollar. The ETF protects investors from those currency-related losses.

 

 

1H 2013 YTD ETF Flows


Net Flows ($,M) AUM ($,M) % of AUM
U.S. Equity 58,018.14 743,217.49 7.81%
International Equity 17,349.87 325,967.02 5.32%
U.S. Fixed Income 8,386.94 227,073.52 3.69%
International Fixed Income 1,991.93 25,799.34 7.72%
Commodities -21,264.80 70,425.95 -30.19%
Currency -229.14 2,311.92 -9.91%
Leveraged 2,069.62 15,625.33 13.25%
Inverse 4,915.93 20,491.16 23.99%
Asset Allocation 1,133.63 3,546.42 31.97%
Alternatives 752.59 3,200.32 23.52%
Total: 73,124.70 1,437,658.47 5.09%

 

1H 2013 YTD Biggest Losers

Ticker Name Issuer June YTD Flows June YTD AUM ($,M) June YTD Turnover
GLD SPDR Gold SSgA -18,175.30 37,137.64 241,434.22
EEM iShares MSCI Emerging Markets BlackRock -8,189.07 34,935.12 325,828.74
TIP iShares Barclays TIPS Bond BlackRock -4,707.49 16,011.71 20,408.31
SPY SPDR S'P 500 SSgA -4,551.56 133,335.51 2,752,330.66
LQD iShares iBoxx $ Investment Grade Corporate Bond BlackRock -4,393.89 19,463.22 36,242.05
VWO Vanguard FTSE Emerging Markets Vanguard -3,124.99 49,355.57 106,738.08
JNK SPDR Barclays High Yield Bond SSgA -2,849.59 9,379.11 31,593.12
FXI iShares FTSE China 25 BlackRock -1,953.20 5,208.19 84,637.18
EMB iShares J.P. Morgan USD Emerging Markets Bond BlackRock -1,848.99 4,384.64 16,161.28
EWZ iShares MSCI Brazil Capped BlackRock -1,847.38 6,052.03 92,535.65

 

1H 2013 YTD Top Gainers

Ticker Name Issuer June YTD Flows June YTD AUM ($,M) June YTD Turnover
DXJ WisdomTree Japan Hedged Equity WisdomTree 8,127.52 9,936.04 34,398.34
EWJ iShares MSCI Japan BlackRock 4,938.27 10,938.15 65,333.07
XLF Financial Select SPDR SSgA 3,412.25 14,446.11 122,264.60
IVV iShares Core S'P 500 BlackRock 3,277.25 42,943.54 85,534.74
BSV Vanguard Short-Term Bond Vanguard 3,238.10 12,404.14 11,131.90
VTI Vanguard Total Stock Market Vanguard 3,220.60 30,796.38 22,627.17
BKLN PowerShares Senior Loan Invesco PowerShares 3,048.29 4,525.68 9,144.32
IWM iShares Russell 2000 BlackRock 2,698.20 21,852.07 476,890.51
USMV iShares MSCI USA Minimum Volatility BlackRock 2,667.40 3,569.67 4,086.11
VIG Vanguard Dividend Appreciation Vanguard 2,400.57 15,835.70 11,657.23

 

June 2013 Total Monthly Flows


Net Flows ($,M) AUM ($,M) % of AUM
U.S. Equity 4,889.08 743,217.49 0.66%
International Equity -7,379.82 325,967.02 -2.26%
U.S. Fixed Income -6,328.47 227,073.52 -2.79%
International Fixed Income -1,054.62 25,799.34 -4.09%
Commodities -2,422.31 70,425.95 -3.44%
Currency -98.61 2,311.92 -4.27%
Leveraged 1,091.85 15,625.33 6.99%
Inverse 16.67 20,491.16 0.08%
Asset Allocation 42.94 3,546.42 1.21%
Alternatives -556.27 3,200.32 -17.38%
Total: -11,799.56 1,437,658.47 -0.82%

 

YTD 2013  ETF Giants

Ticker Name Issuer June YTD Flows June YTD AUM ($ M) June YTD Turnover
SPY SPDR S'P 500 SSgA -4,551.56 133,335.51 2,752,330.66
VWO Vanguard FTSE Emerging Markets Vanguard -3,124.99 49,355.57 106,738.08
IVV iShares Core S'P 500 BlackRock 3,277.25 42,943.54 85,534.74
EFA iShares MSCI EAFE BlackRock 581.45 40,201.94 147,168.97
GLD SPDR Gold SSgA -18,175.30 37,137.64 241,434.22
EEM iShares MSCI Emerging Markets BlackRock -8,189.07 34,935.12 325,828.74
QQQ PowerShares QQQ Invesco PowerShares 416.48 33,645.15 304,504.18
VTI Vanguard Total Stock Market Vanguard 3,220.60 30,796.38 22,627.17
IWM iShares Russell 2000 BlackRock 2,698.20 21,852.07 476,890.51
LQD iShares iBoxx $ Investment Grade Corporate Bond BlackRock -4,393.89 19,463.22 36,242.05

 

Q2 2013 Biggest Losers

Ticker Name Issuer Q2 2013 Flows Q2 2013 AUM ($,M) Q2 2013 Turnover
GLD SPDR Gold SSgA -11,552.30 37,137.64 135,658.90
EEM iShares MSCI Emerging Markets BlackRock -6,770.13 34,935.12 185,289.64
VWO Vanguard FTSE Emerging Markets Vanguard -3,635.67 49,355.57 55,750.20
TIP iShares Barclays TIPS Bond BlackRock -3,240.36 15,990.42 10,888.13
LQD iShares iBoxx $ Investment Grade Corporate Bond BlackRock -3,023.11 19,401.00 20,090.60
JNK SPDR Barclays High Yield Bond SSgA -2,302.65 9,330.63 18,898.84
IAU iShares Gold Trust BlackRock -1,477.21 6,859.86 7,703.18
HYG iShares iBoxx $ High Yield Corporate Bond BlackRock -1,137.56 13,847.79 30,204.55
EWH iShares MSCI Hong Kong BlackRock -1,124.12 2,185.53 5,933.20
IWF iShares Russell 1000 Growth BlackRock -941.07 18,836.90 10,014.43

 

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