2013 ETF Asset-Gathering Now Lags 2012’s
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 2013 first half was the best-performing 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.
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.
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, while the Vanguard FTSE Emerging Markets ETF (VWO) was the least popular fund in the second quarter, bleeding $3.64 billion in assets. In the entire first half, EEM lost more than $8 billion, putting it just behind GLD in redemptions.
Apart from VWO's market-leading outflows in the April-to-June quarter, outflows from a range of bond funds started coming into focus in the quarter, beginning with the iShares Barclays TIPS Bond Fund (TIP), which lost almost $3.25 billion in the quarter, putting it just behind VWO in the No. 2 spot on IndexUniverse's Top 10 Redemptions list.
The iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD) and the SPDR Barclays High Yield Bond ETF (JNK) were in Nos. 3 and 4 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 just under $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 ($,M) | % of AUM | |
U.S. Equity | 4,889.08 | 743,217.49 | 0.66% |
International Equity | -7,379.82 | 325,967.02 | -2.26% |
U.S. Fixed Income | -6,328.47 | 227,073.52 | -2.79% |
International Fixed Income | -1,054.62 | 25,799.34 | -4.09% |
Commodities | -2,422.31 | 70,425.95 | -3.44% |
Currency | -98.61 | 2,311.92 | -4.27% |
Leveraged | 1,091.85 | 15,625.33 | 6.99% |
Inverse | 16.67 | 20,491.16 | 0.08% |
Asset Allocation | 42.94 | 3,546.42 | 1.21% |
Alternatives | -556.27 | 3,200.32 | -17.38% |
Total: | -11,799.56 | 1,437,658.47 | -0.82% |
1H 2013 ETF Giants
Ticker | Name | Issuer | June YTD Flows | June YTD AUM ($, 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 |
VWO | Vanguard FTSE Emerging Markets | Vanguard | -3,635.67 | 49,355.57 | 54,990.48 |
TIP | iShares Barclays TIPS Bond | BlackRock | -3,244.67 | 16,011.71 | 10,750.08 |
LQD | iShares iBoxx $ Investment Grade Corporate Bond | BlackRock | -3,032.80 | 19,463.22 | 19,865.98 |
JNK | SPDR Barclays High Yield Bond | SSgA | -2,314.61 | 9,379.11 | 18,739.17 |
IWF | iShares Russell 1000 Growth | BlackRock | -941.07 | 18,836.90 | 9,916.49 |
IYR | iShares Dow Jones U.S. Real Estate | BlackRock | -640.40 | 4,780.08 | 59,208.86 |
SLV | iShares Silver Trust | BlackRock | -594.94 | 6,003.92 | 20,955.89 |
PFF | iShares S'P U.S. Preferred Stock | BlackRock | -527.49 | 11,028.98 | 6,660.78 |
MOO | Market Vectors Agribusiness | Van Eck | -456.19 | 4,867.32 | 1,424.39 |
WIP | SPDR DB International Government Inflation-Protected Bond | SSgA | -389.72 | 1,191.41 | 956.90 |
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