Record Inflow for ETFs Despite Selling in Largest Stock, Gold Funds

ETF Trends

Global ETFs saw record inflows during the first quarter as more investors tapped the low-cost financial products to participate in the rally that sent U.S. equity indices to new all-time highs.

ETFs listed around the world gathered more than $70 billion in the first quarter, up 7% from the year-ago period, the previous record, according to the Financial Times.

“More cash is coming off the sidelines and being put to work. Record inflows for ETFs reflect investors’ renewed confidence in the outlook for developed equity markets,” said Russ Koesterich, global chief investment strategist at BlackRock, which manages the iShares.

ETFs that invest in U.S. stocks brought in $37.3 billion during the first three months of 2013, jumping 80% from the same period last year.

Yet the largest ETF, SPDR S&P 500 (SPY), experienced net outflows of $6 billion in the first quarter, according to IndexUniverse data. The massive fund still holds $130 billion of assets.

Another ETF managed by State Street, SPDR Gold Shares (GLD), shed $6.6 billion during the quarter. Total assets in the biggest gold ETF currently stand at $62.5 billion.

Koesterich in the FT report said the flow data did not reveal a so-called great rotation from bonds to stocks since fixed-income ETF inflows remained solid, above the $10bn level for an eighth consecutive quarter.

“However, we are seeing a rotation within fixed-income ETFs with more investors preparing themselves for a rise in US interest rates, leading to outflows from Treasury-linked ETFs and into floating rate funds,” the BlackRock strategist said in the article.

Global ETF assets currently stand at $2 trillion.

Full disclosure: Tom Lydon’s clients own SPY and 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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