ETF Flows on Pace to Break $200 Billion for the First Time

ETF Trends

Inflows to exchange traded products listed in the U.S. accelerated in May, putting ETF flows on track to top $200 billion this year for the first time ever.

U.S.-listed exchange traded funds and notes gathered $20.3 billion last month, taking year-to-date inflows to $85.8 billion, according to data from ETF provider BlackRock.

Overall, there were 1,470 exchange traded products with total assets of more than $1.5 trillion.

Last year, U.S. ETF inflows reached a record $191 billion, surpassing the $169 billion flow in 2008. [ETF Inflows May Hit $200 Billion in 2013]

So far in 2013, ETP assets in the U.S. have grown 11% due to inflows and market movements.

“In the U.S. sector category, there was a clear shift in investor preference from defensive categories in April to economically sensitive categories in May,” BlackRock noted. [Utilities, Consumer Staples ETFs in the Doghouse in May]

Sector ETFs listed in the U.S. have brought in $19 billion year to date. Investors have put the most money to work in real estate with $3.8 billion and financials with $3.9 billion, according to BlackRock. [Financial ETF Challenging for 2013 Sector Leadership]

Japan and gold

ETFs that invest in Japan have also been very popular this year as the Nikkei rallied and the Bank of Japan attempted to stimulate inflation. However, WisdomTree Japan Hedged Equity (DXJ) and iShares MSCI Japan (EWJ) have come under pressure recently after a huge rally. [Popular WisdomTree ETF Down Nearly 20% on Japan Pullback, Yen]

On a global basis, Japan equity ETPs gathered a monthly record $10.2 billion during May. Year-to-date flows have also reached record-setting territory at $23.1 billion, or 22.9% of all equity ETP flows. The pace of Japan ETP flows so far in 2013 is already more than double the levels seen annually in both 2011 and 2012, BlackRock said.

Conversely, gold exchange traded products such as SPDR Gold Shares (GLD) have seen heavy outflows in 2013 on the precious metal’s price correction. Gold ETFs are also losing assets on a stronger U.S. dollar, expectations the Federal Reserve could pull back on stimulus, and lower demand for safe havens and inflation hedges.

Global gold ETPs had outflows of $5.7 billion in May, bringing the year-to-date total to $23.9 billion. Total assets in gold ETPs globally shrank to $96.2 billion, a decrease of 31.9% from the $141.2 billion at year-end 2012, according to BlackRock. [Gold Caught in Tug-of-War Between ETF Selling, Coin Purchases]

Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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