ETF Trading Report: European Funds and Growth ETFs In Focus


U.S. equity markets struggled in Tuesday’s trading session as worries over European woes led to a spike in volatility and a decline in stock prices. The Dow finished the session down 1.7% while the S&P 500 and the Nasdaq also fell by similar amounts.

The dollar did manage to strengthen on these worries as a safe haven alternative, pushing the currency higher against many of its international counterparts. This helped to push the benchmark ten year note down below the 2.0% yield level, a seven basis point slump for the intermediate term bond rate.

Thanks to this flight from risk, commodities were also broadly under pressure during Tuesday’s session. Energy commodities were down across the board on fears of lower demand while investors pulled out of soft commodities thanks to risk aversion. Seemingly the only products that did well were in the precious metals space thanks to higher demand for safe havens.

In ETF trading, a number of leveraged, inverse, small cap, and European products saw outsized trading volumes on the day. This came as investors looked to position their portfolios more defensively yet again, or take advantage of the bearish near term trend in the market (read HDGE: The Active Bear ETF Under The Microscope).

In terms of outsized relative trading volumes in ETFs, several products in the growth segment stood out in particular. The iShares S&P 500 Growth Index Fund (IVW) and the iShares Russell 1000 Growth Index Fund (IWF) both saw trading volumes that were nearly triple their averages. Unfortunately for those invested in the large cap growth ETF space, this wasn’t exactly bullish volume as both products were down more than 1.5% in the session.

In the European ETF space, a big mover on the relative volume front was the iShares MSCI Austria Index Fund (EWO). The product usually sees trading volume of about 100,000 shares a day but experienced volumes in excess of 1.1 million shares today, largely thanks to continued European woes (see Hungarian Crisis Crushes The Austria ETF).

Due to this, EWO sank by about 2% on the day, marking an 8.7% slump over the past five trading sessions, slightly outpacing broad euro zone ETFs in the time frame. The ETF is being hampered by its high financial exposure and the twin issues of the PIIGS and its weak neighbor, Hungary. Until these problems are resolved, investors could see outsized trading volumes and weakness in this central European ETF going forward.

See in-depth ETF articles at the Zacks ETF Center.

Read the analyst report on EWO

Read the analyst report on IWF

Read the analyst report on IVW

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