August ETF Flows: Bonds Fuel Outflows

IndexUniverse.com

Investors yanked more than $17 billion out of U.S.-listed ETFs last month—much of that from bond funds—making it the biggest month of outflows in the 20-year history of the ETF industry, amid continuing anxiety that the Federal Reserve might be on the brink of beginning to end the unprecedented era of easy money that followed the great downturn of 2008 and 2009.

Between the net outflows and the 3 percent pullback in the S&P 500 Index, total U.S.-listed ETF assets fell to $1.487 trillion from $1.534 trillion in July, according to data compiled by IndexUniverse. The outflows in August were enough to again pull the ETF asset-gathering juggernaut off its record pace in 2012, with year-to-date inflows totaling $94 billion compared with nearly $99 billion in the same 2012 period. In 2012, investors plowed a record $188 billion in U.S.-listed ETFs .

That said, the record outflows were fueled to a very significant extent by outflows from the SPDR S&P 500 ETF (SPY | A99) , which suffered a whopping $14 billion in redemptions. It’s hard to separate SPY’s day-to-day creations and redemptions from statistical noise, according to Dave Nadig, IndexUniverse’s President of ETF Analytics, so to call August a record month of outflows might be a touch misleading.

That said, the clear trend—or trends—were, as noted, outflows from a variety of bond funds, and inflows into strategies focused on the mid-cap stocks and on a resurgent Europe. Regarding bonds, investors have been trimming duration risk since Ben Bernanke’s suggestion that the Fed might start to “taper” its quantitative easing program sometime this year, and that continued in August as it was in June.

Bond Outflows

Investors pulled more than $6.5 billion out of bond funds last month, with the iShares 3-7 Year Treasury Bond ETF (IEI |A77) just behind SPY at No. 2 on the redemptions list. IEI has been something of a “canary in the coal mine” regarding investor sentiment surrounding Fed tapering, with the fund losing assets as concern increases about tapering, but gaining assets when those concerns abate.

The bond outflows extended to various pockets of the fixed-income world, including investment-grade and high-yield corporate credits.

“Investors are concerned about now-rising interest rates, and the potential for a further rise in interest rates,” Todd Rosenbluth, an ETF analyst with S&P Capital IQ said in a telephone interview regarding the broad bond outflows last month.

Emerging markets have also been stumbling hard since the prospect of the Fed taking away all the monetary accommodation has come into focus, and flows out of the market's biggest strategy made that plain. The Vanguard FTSE Emerging Markets ETF (VWO | B85) suffered outflows of $1.8 billion, leaving $47 billion in what has become the world’s second biggest ETF.

Warming Up To Europe

He agreed with IU’s Nadig that over-characterizing SPY’s substantial outflows last month was not terribly wise, but did say investors appeared to be warming up to European equities as they scoured for prospective pockets of the investment universe at a time of transition.

While U.S. equities, led by SPY, bled almost $16 billion in assets last month, international equities hauled in almost $3 billion.

The Vanguard FTSE Europe ETF (VGK | A95) was No. 2 on the creations list, pulling in about $1.5 billion, with its total assets ending the month at more than $8 billion after ending July with $6.8 billion.

But topping the creations list was the iShares Core S&P Mid-Cap ETF (IJH | A81) , which pulled in $2.2 billion. Between IJH’s inflows and moves into other mid-cap strategies, it was tempting to see a rotation out of large-cap stocks and into mid caps, IU’s Nadig said.

 

August 2013 Biggest Losers ($, Millions)
Ticker Name Issuer August 2013 Flows August 2013 AUM ($, M) August 2013 Turnover
SPY SPDR S&P 500 SSgA -14,030.65 135,732.78 381,043.03
IEI iShares 3-7 Year Treasury Bond BlackRock -2,335.08 2,519.37 3,961.96
LQD iShares iBoxx $ Investment Grade Corporate Bond BlackRock -1,289.96 17,578.33 4,817.40
VWO Vanguard FTSE Emerging Markets Vanguard -1,184.62 47,273.61 14,721.32
QQQ PowerShares QQQ Invesco PowerShares -1,098.91 35,800.50 40,315.92
XLP Consumer Staples Select SPDR SSgA -1,070.86 5,407.63 6,248.72
XLF Financial Select SPDR SSgA -1,049.44 14,889.63 15,870.58
DIA SPDR Dow Jones Industrial Average Trust SSgA -998.65 11,655.01 18,977.25
SHV iShares Short Treasury Bond BlackRock -936.99 3,681.68 2,271.77
HYG iShares iBoxx $ High Yield Corporate Bond BlackRock -831.52 14,268.65 7,575.52

 

August 2013 Top Gainers ($, Millions)
Ticker Name Issuer August 2013 Flows August 2013AUM ($, M) August 2013 Turnover
IJH iShares Core S&P Mid-Cap BlackRock 2,176.34 18,798.31 4,846.58
VGK Vanguard FTSE Europe Vanguard 1,484.53 8,135.37 3,963.10
MVV ProShares Ultra MidCap 400 ProShares 1,323.00 1,275.04 1,734.75
EZU iShares MSCI EMU BlackRock 973.73 3,540.21 2,791.74
EFA iShares MSCI EAFE BlackRock 849.82 42,311.81 19,335.51
VEA Vanguard FTSE Developed Markets Vanguard 572.74 14,820.62 2,690.80
FEEU Barclays ETN+ FI Enhanced Europe 50 Barclays Capital 509.13 787.29 95.99
VOO Vanguard S&P 500 Vanguard 456.91 10,786.07 2,275.60
BSV Vanguard Short-Term Bond Vanguard 424.13 13,237.56 1,950.99
BKLN PowerShares Senior Loan Invesco PowerShares 373.54 5,309.08 1,505.42

 

August 2013 Asset Classes Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity - 15,876.92 773,253.77 -2.05%
International Equity 2,995.85 339,438.99 0.88%
U.S. Fixed Income -6,654.66 222,590.51 -2.99%
International Fixed Income -268.67 25,083.61 -1.07%
Commodities - 38.25 79,273.60 -0.05%
Currency - 68.68 2,121.55 -3.24%
Leveraged 1,145.11 16,878.49 6.78%
Inverse 1,250.92 21,497.02 5.82%
Asset Allocation -5.61 3,564.70 -0.16%
Alternatives 1.04 3,706.55 0.03%
Total: - 17,519.87 1,487,408.80 -1.18%

 

August 2013 League Tables
Issuer Net Flows AUM ($M) % of AUM Turnover
BlackRock - 4,335.30 587,871.27 -0.74% 342,594.85
SSgA - 19,522.39 337,705.51 -5.78% 542,849.33
Vanguard 3,750.44 289,747.61 1.29% 48,876.88
Invesco PowerShares -807.92 83,861.07 -0.96% 50,795.92
WisdomTree -483.79 29,017.76 -1.67% 9,947.12
ProShares 1,573.96 26,165.88 6.02% 62,673.23
Van Eck -769.37 22,353.38 -3.44% 37,025.68
Guggenheim 436.74 16,520.65 2.64% 4,717.82
First Trust 583.00 13,790.38 4.23% 3,002.92
Charles Schwab 405.63 13,373.95 3.03% 2,174.18
PIMCO 120.12 13,230.49 0.91% 2,778.39
Barclays Capital 610.48 8,010.58 7.62% 15,199.98
ALPS 261.28 7,441.53 3.51% 1,286.02
Direxion 133.14 6,400.68 2.08% 48,849.43
Northern Trust 221.06 5,845.61 3.78% 471.82
JPMorgan - 5,545.45 0.00% 580.79
ETF Securities -100.70 3,470.07 -2.90% 423.09
UBS 110.37 3,084.73 3.58% 858.40
US Commodity Funds 20.84 2,578.95 0.81% 7,832.80
Global X 131.52 2,176.49 6.04% 600.95
Emerging Global Shares 41.83 1,340.82 3.12% 185.63
Merrill Lynch 27.02 1,209.34 2.23% 180.23
VelocityShares 99.06 947.56 10.45% 8,470.84
AdvisorShares 74.25 898.13 8.27% 277.77
Credit Suisse 4.08 787.17 0.52% 124.64
IndexIQ 4.89 760.75 0.64% 100.75
RevenueShares -0.30 542.19 -0.06% 87.83
Deutsche Bank 24.95 460.56 5.42% 79.72
RBS Securities 10.12 402.28 2.52% 98.18
GreenHaven -35.77 363.71 -9.83% 76.87
Goldman Sachs - 262.72 0.00% 9.46
Exchange Traded Concepts 10.06 250.12 4.02% 47.54
Fidelity -57.01 240.60 -23.70% 110.37
Precidian -66.31 121.54 -54.56% 246.77
Cambria -1.29 114.53 -1.13% 34.18
Highland Capital Management 5.99 101.59 5.90% 17.15
Arrow Investment Advisors -5.67 73.04 -7.77% 47.77
Teucrium 3.51 72.98 4.81% 91.23
Jefferies - 63.34 0.00% 4.57
Morgan Stanley - 47.39 0.00% 7.31
Pax World 5.41 38.32 14.11% 4.13
Huntington Strategy Shares - 27.15 0.00% 4.08
Columbia - 25.05 0.00% 5.17
Horizons - 18.33 0.00% 8.22
Factor Advisor 0.89 13.59 6.54% 10.29
KraneShares 2.62 8.03 32.65% 1.13
Russell - 7.90 0.00% 3.02
FFCM -11.66 7.85 -148.52% 21.47
LocalShares 3.72 5.94 62.69% 6.52
CitiGroup 0.64 4.21 15.12% 9.90
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