ETF Fund Flows Report: Investors Pile Into Emerging Markets In October

• By Matt Hougan
• On 3:13 pm EST, Tuesday November 10, 2009

Exchange-traded funds and exchange-traded notes saw $8.8 billion in net investor inflows in October, according to new data released from the National Stock Exchange. That brings total net inflows for U.S.-listed ETFs and ETNs in 2009 to $72.2 billion.

Industry assets rose slightly from $704.9 billion to $707.4 billion. The split is $699.8 billion for ETFs and $7.6 billion for ETNs.

ETNs enjoyed $656 million in net inflows, compared with $8.2 billion for ETFs.

Inflows By Asset Class:Long-Only ETFs

Inflows were seen in all major asset classes save U.S. equities in October. International equities led the way, with $7.5 billion in inflows, followed by fixed income, with $3.1 billion.

Year-to-date, fixed income, commodity and international equity ETFs lead the flows tables, with $34.6 billion, $25.0 billion and $24.4 billion in inflows, respectively. U.S. equity ETFs suffered $30.1 billion in net outflows so far this year.

Long-Only ETFs Inflows:October 2009
	Net Assets	October Inflows	YTD Inflows
U.S. Equity	$317,287	($4,870)	($30,133)
International Equity	$184,305	$7,473	$24,390
Real Estate	$11,028	$624	$3,047
Fixed Income	$93,621	$3,078	$34,586
Commodity	$64,948	$885	$24,968
Currency	$4,671	$515	$1,165
TOTAL	$675,860	$7,705	$58,012
Source:NSX. Data through Oct. 31, 2009. All figures in $ US millions.

Inflows By Asset Class:Leveraged/Inverse ETFs

Leveraged and inverse ETFs allow investors to make aggressive, short-term bets on the direction of the markets. Watching flows into these funds gives a good window on how investors are positioning themselves for the short term.

In October, fund flows into leveraged and inverse ETFs were decidedly bearish, with traders putting just $42 million in net new money to work in leveraged long ETFs, while investing $1.1 billion in inverse and inverse-leveraged ETFs. Year-to-date, the flows tell a similar story, with investors pulling $5.7 billion out of leveraged long funds and plowing $19.9 billion into inverse products.

Flows into inverse U.S. equity ETFs led the way in October, with bearish funds pulling down $433 million in new inflows. The only place investors pulled back money in October was from leveraged long commodity ETFs, where they removed $201 million from the pool.

Leveraged And Inverse ETFs Inflows:October 2009
	Leveraged Long Inflows:October	Inverse Inflows:October	Leveraged Long Inflows:YTD	Inverse Inflows:YTD
U.S. Equity	$93	$433	($6,554)	$13,828
International Equity	$58	$57	$209	$893
Real Estate	$87	$93	$593	$1,363
Fixed Income	$5	$241	$26	$2,909
Commodity	($201)	$180	$53	$614
Currency	$0	$63	$11	$269
TOTAL	$42	$1,066	($5,662)	$19,875
Source:NSX. Data through Oct. 31, 2009. All figures in $ US millions.

Top Ten ETF Fund Flows:October 2009

The two broad-market emerging market ETFs led all-comers for October fund flows, with the Vanguard MSCI Emerging Markets ETF (NYSEArca:VWO - News) attracting $2.2 billion and the iShares MSCI Emerging Markets ETF (NYSEArca:EEM - News) attracting $1.8 billion. VWO continues to cut into EEM’s lead on assets, and now has $15.9 billion vs. $35.0 billion for its larger rival.

Bond funds made up five of the top 10 places in fund flows for October, led by the iShares Barclays TIPS ETF (NYSEArca:TIP - News), which pulled in $589 million. It now has $7.6 billion in new cash flow this year, the second-most of any ETF, trailing only the SPDR Gold Fund (NYSEArca:GLD - News), which has $12.5 billion.

Top Ten ETF Inflows:October 2009
Fund	Ticker	October Inflows	YTD Flows	Net Assets
Vanguard MSCI Emerging Markets	VWO	$2,204	$6,378	$15,872
iShares MSCI-Emerging Markets	EEM	$1,766	$3,647	$35,027
iShares Barclays TIPS	TIP	$589	$7,621	$17,224
iShares Barclays 1-3 Yr Credit	CSJ	$392	$3,163	$4,097
Vanguard Barclays Total Bond	BND	$356	$2,688	$5,758
Vanguard Barclays Short Term Bond	BSV	$327	$1,815	$3,005
US Natural Gas	UNG	$308	$4,903	$3,784
iShares JPM USD Emerging Mkt Bond	EMB	$302	$661	$845
SPDR Consumer Staples	XLP	$300	($134)	$2,245
Vanguard Morgan Stanley REIT	VNQ	$295	$1,517	$3,842
Source:NSX. Data through Oct. 31, 2009. All figures in $ US millions.

Money continued to flow out of the SPDR S&P 500 ETF (NYSEArca:SPY - News), which lost $2.3 billion in net investor cash in October, bringing its year-to-date outflows to $32.1 billion. Other large-asset ETFs like the iShares Russell 2000 (NYSEArca:IWM - News) and PowerShares QQQ (NasdaqGM:QQQQ - News) saw significant outflows as well.

Top Ten ETF Outflows:October 2009
Fund	Ticker	October Outflows	YTD Flows	Net Assets
SPDR S&P 500	SPY	($2,336)	($32,061)	$67,356
iShares Russell 2000	IWM	($1,100)	($1,134)	$10,948
iShares iBoxx Inv Grade Corp Bond	LQD	($706)	$4,890	$12,945
US Oil Fund	USO	($590)	($581)	$2,128
PowerShares QQQ	QQQQ	($432)	($873)	$16,550
SPDR Financial	XLF	($354)	($1,562)	$6,550
SPDR Consumer Discretionary	XLY	($268)	$114	$1,018
iShares FTSE/XINHUA China 25	FXI	($258)	$7	$9,298
Vanguard Mega Cap 300 Growth	MGK	($247)	$43	$253
iShares Russell 2000 Val	IWN	($232)	($347)	$3,383
Source:NSX. Data through Oct. 31, 2009. All figures in $ US millions.

All told, 405 ETFs and ETNs had positive cash flows in October, while 132 products had outflows. Overall, 343 products had no cash flow in either direction.

Top Ten ETF Fund Flows:YTD Through October 2009

As mentioned, GLD leads all funds for net inflows year-to-date through October, pulling in $12.5 billion. That’s followed by TIP and VWO. The United States Natural Gas Fund (NYSEArca:UNG - News) is fourth, with $4.9 billion in assets. The iShares iBOXX Investment Grade Corporate Bond ETF (NYSEArca:LQD - News) is fifth, with $4.9 billion, despite seeing $700 million in outflows in October.

Top Ten ETF Inflows:YTD 2009
Fund	Ticker	YTD Inflows	October Flows	Net Assets
SPDR Gold	GLD	$12,527	$272	$36,917
iShares Barclays TIPS	TIP	$7,621	$589	$17,224
Vanguard MSCI Emerging Markets	VWO	$6,378	$2,204	$15,872
US Natural Gas	UNG	$4,903	$308	$3,784
iShares iBoxx Inv Grade Corp Bond	LQD	$4,890	($706)	$12,945
iShares MSCI-Emerging Mkts	EEM	$3,647	$1,766	$35,027
Direxion Daily Financials Bear 3x	FAZ	$3,248	($83)	$1,096
iShares Barclays 1-3 Yr Credit	CSJ	$3,163	$392	$4,097
ProShares UltraShort S&P 500	SDS	$3,071	$91	$3,621
Vanguard Barclays Total Bond	BND	$2,688	$356	$5,758
Source:NSX. Data through Oct. 31, 2009. All figures in $ US millions.

On the reverse side, the top ten ETFs for YTD outflows are still dominated by many of the largest ETFs in the world. The leader by far is the SPDR S&P 500 ETF (NYSE Arca:SPY), which remains the largest ETF in the world despite witnessing $32.1 billion in net outflows so far this year (including $2.4 million in October).

The iShares MSCI EAFE ETF is next, with $4.4 billion in outflows, followed by the iShares Russell 1000 Growth (NYSEArca:IWF - News). The ProShares Ultra S&P 500 ETF (NYSEArca:SSO - News) is fourth, with $2.5 billion in outflows, leaving it with just $1.6 billion in net assets under management.

Top Ten ETF Outflows:YTD 2009
Fund	Ticker	YTD Inflows	October Flows	Net Assets
SPDR S&P 500	SPY	($32,061)	($2,336)	$67,356
iShares MSCI-EAFE	EFA	($4,382)	$0	$33,929
iShares Russell 1000 Gr	IWF	($2,542)	($187)	$10,109
ProShares Ultra S&P 500	SSO	($2,540)	($96)	$1,607
Diamonds DJIA	DIA	($2,270)	($174)	$7,501
iShares Russell 1000	IWB	($1,788)	($216)	$4,564
iShares Russell 1000 Val	IWD	($1,627)	$46	$8,145
SPDR Financial	XLF	($1,562)	($354)	$6,550
ProShares Ultra QQQ	QLD	($1,185)	($20)	$861
iShares Russell 2000	IWM	($1,134)	($1,100)	$10,948
Source:NSX. Data through October 2009. All figures in $ US millions.

All told, 673 of the 880 ETFs have had positive or flat YTD fund flows.

Company Fund Flows:October 2009

On a companywide basis, BGI led all ETF and ETN providers by netting $3.8 billion in net cash inflows. Up-and-comer Vanguard was hot on its heels, however, pulling in $3.4 billion as its campaign for sticky ETF assets continues. Van Eck inked a very respectable third-place showing, with $722 million in inflows, followed by ProShares, at $601 million and its leveraged/inverse competitor Direxion, at $391 million.

On the flip side, State Street Global Advisors led the list of largest outflows, at $1.8 billion, as outflows from its flagship SPY fund overwhelmed other products. The only other fund companies to see net outflows in October were US Commodity Funds, the HOLDRs and the MacroShares.

ETF/ETN Company Inflows:October 2009
Fund Company	October Inflows	YTD Inflows
BGI	$3,759	$31,034
Vanguard	$3,353	$20,802
Van Eck	$722	$3,219
ProShares	$601	$8,495
Direxion	$391	$5,227
Barclays ETNs	$343	$2,348
Wisdom Tree	$319	$1,529
Invesco/PowerShares	$289	$6,970
Claymore	$165	$924
Rydex	$141	$833
First Trust	$135	$601
Morgan Stanley ETNs	$130	$254
Bank of NY	$122	($415)
ETF Securities	$110	$317
PIMCO	$91	$198
Swedish Export Credit ETNs	$81	($599)
UBS ETNs	$65	$419
ALPS	$54	$65
RevenueShares	$31	$164
HSBC ETNs	$28	$70
IndexIQ	$20	$81
AdvisorShares	$20	$56
GreenHaven	$15	$182
Grail	$10	$13
Credit Suisse ETNs	$5	$1
Emerging Global	$5	$28
X-Shares	$4	$22
JP Morgan ETNs	$3	$45
OOK	$3	$3
GlobalX	$3	$9
Fidelity	$0	$14
Javelin	$0	$2
Northern Trust	$0	($15)
FocusShares	$0	$0
SPA	$0	($5)
Bear Stearns	$0	$0
Ziegler	$0	$0
Goldman Sachs ETNs	$0	($115)
MacroShares	($3)	$76
Merrill (HOLDRs)	($98)	($931)
US Commodity Funds	($307)	$4,437
SSgA	($1,762)	($14,003)
Source:NSX. Data through Oct. 31, 2009. All figures in $ US millions.

Company Fund Flows:YTD Through October 2009

BGI also leads all other providers on a year-to-date basis, notching $31.0 billion in net inflows. That is followed by Vanguard at $20.9 billion, ProShares at $8.5 billion and Invesco/PowerShares at $7.0 billion. Interestingly, the vast majority of PowerShares inflows year-to-date ($5.3 billion) have been through the commodity-related ETFs and ETNs. These products now have a combined $10 billion in assets.

On the outflows side, State Street Global Investors has seen the largest outflows by far, at $14.0 billion, again thanks to fluctuations in assets in its SPY product. After that, there’s a sharp drop-off, to the HOLDRs, at $931 million.

ETF/ETN Company Inflows:YTD
Company	YTD Flows	October Flows
BGI	$31,034	$3,759
Vanguard	$20,802	$3,353
ProShares	$8,495	$601
Invesco/PowerShares	$6,970	$289
Direxion	$5,227	$391
US Commodity Funds	$4,437	($307)
Van Eck	$3,219	$722
Barclays ETNs	$2,348	$343
Wisdom Tree	$1,529	$319
Claymore	$924	$165
Rydex	$833	$141
First Trust	$601	$135
UBS ETNs	$419	$65
ETF Securities	$317	$110
Morgan Stanley ETNs	$254	$130
PIMCO	$198	$91
GreenHaven	$182	$15
RevenueShares	$164	$31
IndexIQ	$81	$20
MacroShares	$76	($3)
HSBC ETNs	$70	$28
ALPS	$65	$54
AdvisorShares	$56	$20
JP Morgan ETNs	$45	$3
Emerging Global	$28	$5
XShares	$22	$4
Fidelity	$14	$0
Grail	$13	$10
GlobalX	$9	$3
OOK	$3	$3
Javelin	$2	$0
Credit Suisse ETNs	$1	$5
FocusShares	$0	$0
Bear Stearns	$0	$0
Ziegler	$0	$0
SPA	($5)	$0
Northern Trust	($15)	$0
Goldman Sachs ETNs	($115)	$0
Bank of NY	($415)	$122
Swedish Export Credit ETNs	($599)	$81
Merrill (HOLDRs)	($931)	($98)
SSgA	($14,003)	($1,762)
Source:NSX. Data through Oct. 31, 2009. All figures in $ US millions.

ETF League Table:October 2009

The ETF League Table continues to be dominated by the big three:iShares, SSgA and Vanguard. With $343 billion in assets, iShares currently enjoys a 48.6 percent market share, more than twice that of SSgA’s 22.6 percent share. Vanguard comes in a solid third, with an 11.4 percent market share, followed by PowerShares at 5.7 percent and ProShares at 3.6 percent.

The only other companies to net a 1% or greater share are Van Eck (1.5 percent) and Bank of New York (1.1 percent).

BGI also leads all companies in year-over-year asset growth, up $111 billion, while Vanguard takes a surprise second place, with $40 billion in asset growth. Vanguard has doubled its assets under management in the ETF space over the past year.

Other firms showing significant year-over-year growth are Van Eck (assets up from approximately $3 billion to over $10 billion) and the US Commodity Funds (assets up from $1.6 billion to $6.2 billion).

ETF/ETN Industry League Table:October 2009
Issuer	Assets Under Management	Share Of Industry	Asset Growth Y-O-Y
BGI	$ 343,717	48.57%	$ 111,433
SSgA	$ 159,709	22.57%	$ 16,198
Vanguard	$ 80,372	11.36%	$ 40,160
Invesco/PowerShares	$ 40,042	5.66%	$ 12,738
ProShares	$ 25,187	3.56%	$ 6,125
Van Eck	$ 10,364	1.46%	$ 7,051
Bank of NY	$ 7,862	1.11%	$ 1,984
US Commodity Funds	$ 6,157	0.87%	$ 4,588
Rydex	$ 5,731	0.81%	$ 1,693
Wisdom Tree	$ 5,582	0.79%	$ 2,307
Merrill (HOLDRs)	$ 4,945	0.70%	$ (1,485)
Direxion	$ 4,855	0.69%	$ 4,855
Claymore	$ 2,371	0.34%	$ 1,387
First Trust	$ 1,602	0.23%	$ 832
ETF Securities	$ 339	0.05%	$ 339
RevenueShares	$ 270	0.04%	$ 235
GreenHaven	$ 224	0.03%	$ 208
PIMCO	$ 199	0.03%	$ 199
XShares	$ 168	0.02%	$ 12
Fidelity	$ 124	0.02%	$ 36
ALPS	$ 84	0.01%	$ 80
Emerging Global	$ 31	0.00%	$ 31
MacroShares	$ 21	0.00%	$ (1)
Grail	$ 13	0.00%	$ 13
GlobalX	$ 11	0.00%	$ 11
IndexIQ	$ 83	0.01%	$ 83
Javelin	$ 5	0.00%	$ 5
OOK	$ 3	0.00%	$ 3
AdvisorShares	$ 22	0.00%	$ 22
Barclays ETNs	$ 5,228	0.74%	$ 2,338
Deutsche Bank ETNs	$ 829	0.12%	$ 320
Swedish Export Credit ETNs	$ 771	0.11%	$ 519
JP Morgan ETNs	$ 451	0.06%	$ 384
UBS ETNs	$ 131	0.02%	$ 87
HSBC ETNs	$ 81	0.01%	$ 64
Morgan Stanley ETNs	$ 69	0.01%	$ (43)
Goldman Sachs ETNs	$ 66	0.01%	$ (4)
Credit Suisse ETNs	$ 3	0.00%	$ (6)
Source:NSX. All data through Oct. 31, 2009. All figures in $ US millions.

You can read the September ETF Fund Flows report here.

Buzz up!