Investors plowed significant assets into fixed-income ETFs during the 2012 second quarter and first half, as concerns about the European debt crisis continued to undermine confidence in economic recovery both in the U.S. and abroad.
Overall, total U.S.-listed ETF assets rose 11 percent in the first half of the year to $1.179 trillion, a figure which includes market movements.
Sluggish economies in much of the developed world have now prevailed for the better part of four years, and the eurozone's debt problems have helped prolong a rally in the bond market that pulled yields on 10-year Treasurys well below 2 percent to a record low in the second quarter. Yields drop when bond prices rise.
More than $18 billion of new assets found its way into domestic and international bond funds during the April-to-June period. Those inflows came as investors also trimmed exposure to riskier assets, namely equities. As an asset class, equities gathered only a net of $5.5 billion in the quarter.
Nine of the 10 biggest asset-losing ETFs in the quarter were equities funds and the 10th was a high-yield bond fund, according to data compiled by IndexUniverse.
The iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD) was the most popular fund, attracting $2.56 billion. The Vanguard Total Bond Market ETF (BND) was No. 2 on IndexUniverse's second-quarter "Top Gainers" list, with inflows of $1.91 billion.
Year-to-date data also betrayed the bond-friendly, flight-to-safety trade, though it was less pronounced than in the second quarter. Investors poured more than $35 billion into fixed-income ETFs in the first half, with $31.26 billion going into U.S. debt funds.
All in all, U.S.-listed bond-ETF assets have surged 40 percent in the first half to $211.49 billion—a reflection of both inflows and price market action.
By contrast, upward of $37 billion found its way into equities funds in the first half of the year, but those flows represented only a 10 percent rise in total assets once market action was taken into account.
|Q2 Flows ' Total AUM||Net Flows ($, mm)||AUM ($, mm)||% of AUM|
|International Equity||- 1,833.90||262,490.60||-0.70%|
|U.S. Fixed Income||16,042.95||211,491.06||7.59%|
|International Fixed Income||2,469.08||17,110.70||14.43%|
|YTD Flows By Asset Class ' Total AUM||Net Flows ($, mm)||AUM ($, mm)||% of AUM|
|U.S. Fixed Income||31,264.87||211,491.06||14.78%|
|International Fixed Income||4,031.54||17,110.70||23.56%|
2012 Q2 Top Gainers ($, Millions)
|Ticker||Name||Issuer||Q2 2012 Flows||Q2 2012
AUM ($, M)
|Q2 2012 Turnover|
|LQD||iShares iBoxx $ Investment Grade Corporate Bond||BlackRock||2,560.17||22,680.80||14,560.78|
|BND||Vanguard Total Bond Market||Vanguard||1,907.66||17,387.17||6,755.64|
|SPY||SPDR S'P 500||SSgA||1,525.85||103,726.99||1,474,939.83|
|VOO||Vanguard S'P 500||Vanguard||1,437.58||4,745.14||3,552.12|
|BOND||PIMCO Total Return||PIMCO||1,418.32||1,723.61||2,767.70|
|VWO||Vanguard MSCI Emerging Markets||Vanguard||1,010.22||50,655.46||60,360.22|
|CIU||iShares Barclays Intermediate Credit Bond||BlackRock||986.42||5,523.08||1,582.92|
|IEI||iShares Barclays 3-7 Year Treasury Bond||BlackRock||955.72||3,231.65||2,654.43|
|AMJ||JPMorgan Alerian MLP ETN||JPMorgan Chase||945.00||4,867.17||4,005.66|
2012 First Half Top Gainers ($, Millions)
|Ticker||Name||Issuer||6/29/2012 YTD Flows||6/29/2012 YTD AUM ($, M)||6/29/2012 YTD Turnover|
|VWO||Vanguard MSCI Emerging Markets||Vanguard||7,454.06||50,655.46||118,565.17|
|LQD||iShares iBoxx $ Investment Grade Corporate Bond||BlackRock||4,958.73||22,680.80||28,955.75|
|HYG||iShares iBoxx $ High Yield Corporate Bond||BlackRock||3,770.89||14,743.07||37,141.46|
|BND||Vanguard Total Bond Market||Vanguard||2,624.70||17,387.17||13,934.84|
|VOO||Vanguard S'P 500||Vanguard||2,185.48||4,745.14||6,126.36|
|QQQ||PowerShares QQQ||Invesco PowerShares||2,179.15||31,936.67||411,810.91|
|VXX||iPath S'P 500 VIX Short-Term Futures ETN||Barclays||1,920.87||1,655.11||110,711.06|
|VIG||Vanguard Dividend Appreciation||Vanguard||1,797.71||11,067.02||8,480.16|
|DEM||WisdomTree Emerging Markets Equity Income||WisdomTree||1,702.67||3,729.43||5,176.85|
VWO Vs. EEM, Again
The Vanguard MSCI Emerging Markets ETF (VWO) was the most popular ETF in the first half of the year, the leading edge of the success of Vanguard's low-cost strategy in the pure beta pocket of the ETF world.
VWO brought in $7.45 billion in the first half, while the iShares MSCI Emerging Markets Index Fund (EEM), which offers nearly identical exposure to the same MSCI index, gathered $699.65 million in the same six-month period.
The second-quarter difference between the two ETFs was more pronounced, with VWO pulling in $1.01 billion while EEM suffered outflows of $1.99 billion. Those redemptions made EEM the No. 2 fund on IndexUniverse's "Biggest Losers" table for the second quarter.
The PowerShares QQQ Trust (QQQ) was the least popular fund in the quarter, bleeding $2.05 billion, while the SPDR Dow Jones Industrial Average Trust (DIA) was No. 3 on the list, with outflows of $1.33 billion in the period.
2012 Q2 Biggest Losers ($, Millions)
|Ticker||Name||Issuer||Q2 2012 Flows||Q2 2012
AUM ($, M)
|Q2 2012 Turnover|
|QQQ||PowerShares QQQ||Invesco PowerShares||- 2,045.06||31,936.67||219,034.96|
|EEM||iShares MSCI Emerging Markets||BlackRock||- 1,994.77||33,799.39||140,254.97|
|DIA||SPDR Dow Jones Industrial Average Trust||SSgA||- 1,331.68||10,963.55||54,681.59|
|JNK||SPDR Barclays Capital High Yield Bond||SSgA||- 1,188.33||10,745.34||14,405.93|
|FXI||iShares FTSE China 25||BlackRock||- 863.73||4,639.68||43,697.22|
|XLF||Financial Select SPDR||SSgA||- 730.08||6,174.17||77,091.47|
|IWR||iShares Russell Midcap||BlackRock||- 693.77||5,754.62||2,540.35|
|AAXJ||iShares MSCI All Country Asia ex-Japan||BlackRock||- 659.99||1,780.98||2,658.54|
|EFA||iShares MSCI EAFE||BlackRock||- 453.60||34,133.09||68,699.48|
|IJS||iShares S'P SmallCap 600 Value||BlackRock||- 430.65||1,696.33||1,593.62|
2012 First Half Biggest Losers ($, Millions)
YTD AUM ($, M)
|EFA||iShares MSCI EAFE||BlackRock||- 2,882.61||34,133.09||134,868.79|
|EWZ||iShares MSCI Brazil||BlackRock||- 1,491.09||7,259.66||126,591.55|
|XLU||Utilities Select SPDR||SSgA||- 1,106.91||6,683.06||29,783.08|
|FXI||iShares FTSE China 25||BlackRock||- 937.57||4,639.68||84,877.41|
|UUP||PowerShares DB US Dollar Index Bullish||Invesco PowerShares||- 723.74||1,155.05||9,262.47|
|IWR||iShares Russell Midcap||BlackRock||- 671.39||5,754.62||4,898.01|
|SSO||ProShares Ultra S'P 500||ProShares||- 670.92||1,278.11||55,543.03|
|FAS||Direxion Daily Financial Bull 3x||Direxion||- 586.56||1,320.20||100,908.32|
|FXY||CurrencyShares Japanese Yen||Guggenheim||- 549.02||166.27||4,844.39|
|IWM||iShares Russell 2000||BlackRock||- 532.53||14,634.71||533,733.59|
Low-Cost Providers Shine
Riding the success of funds like VWO and the bond fund BND, Vanguard is continuing its climb up the ETF industry League Table. It's quietly creeping up on State Street Global Advisors, the second-biggest U.S. ETF firm by assets.
Vanguard's total assets under management, including market movement, hit $208.64 billion at the end of June, up 22.7 percent year-to-date, including market movement. SSgA ended the first half with $291.14 billion in total assets, up 9.3 percent so far this year.
BlackRock's iShares—the world's largest ETF provider and still the No. 1 ETF issuer by far—saw its ETF assets rise 7.5 percent year-to-date to $482.23 billion.
Other ETF providers that are playing the low-cost card have also done well with investors.
Charles Schwab, for instance, which brought the first of its low-cost ETFs to market in 2009, gathered $1.36 billion in the first half of the year, ending the period with $6.70 billion in assets. Schwab is now the 11th largest U.S. ETF provider.
Scottrade's ETF unit, FocusShares, is still a relatively small player in the ETF market, but the low-cost provider has seen its total assets rise 23 percent year-to-date to almost $100 million.
|2012 First Half YTD League TableNet FlowsAUM ($M)% of AUMTurnover|
|Issuer||Net Flows||AUM ($M)||% of AUM||Turnover|
|US Commodity Funds||728.70||3,149.86||23.13%||69,538.27|
|Merrill Lynch||- 66.35||1,120.53||-5.92%||1,196.72|
|Emerging Global Shares||162.51||691.98||23.49%||822.22|
|Credit Suisse||- 14.52||368.56||-3.94%||444.56|
|Deutsche Bank||- 32.50||139.54||-23.29%||162.30|
|Exchange Traded Concepts||43.87||42.35||103.60%||79.21|
|Huntington Strategy Shares||5.09||5.10||99.74%||8.28|
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