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ETF Asset Report of August

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·4 min read
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Wall Street delivered a decent performance last month with the S&P 500 and the Dow Jones adding 1.5% each and the Nasdaq Composite gaining about 3.1%. The Russell 2000 Index has advanced about 2.3% past month.

A few updates led to this result. Optimism about corporate earnings and upbeat economic data points and the passage of the infrastructure bill helped key U.S. equity indexes go higher. News of zero new cases in China and U.S. FDA’s full approval of Pfizer-BioNTech Covid-19 vaccine also led to the strength in the market.

However, taper talks were ripe in the month, which unsteadied the market momentum initially. But things ended the month on a better note with no new flare-up in taper talks and the moderate strength in the greenback.

In this scenario, we highlight ETF asset flows for the month of August (per etf.com).

S&P 500 & Total Stock Market Top

The S&P 500 hit record highs in the month on upbeat U.S. economic data points and corporate earnings. U.S. corporate profits jumped to a fresh record high in the second quarter, boosted by robust demand and higher prices. The data outdid soaring COVID-19 cases in the United States.

Vanguard Total Stock Market ETF VTI, Vanguard S&P 500 ETF VOO, SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) amassed about $5.27 billion, $4.37 billion, $2.50 billion and $2.12 billion in assets, respectively.

Bond Market Hot Too

iShares iBoxx USD Investment Grade Corporate Bond ETF LQD attracted about $2.49 billion last month. Renewed coronavirus threat in different parts of the world have probably given a boost to safe-haven bond investing. Corporate earnings strength has also been aiding the fund. LQD yields 2.38% annually.

China Tech Stocks Regain Investors’ Confidence

KraneShares CSI China Internet ETF KWEB amassed about $1.59 billion in assets.  China ETFs were crushed this year due to regulators’ crackdown on various sectors, mainly the all-important technology space. Against this backdrop, Hong Kong stocks jumped from an almost 10-month low after the market fell into a bear-territory. Tech stocks moved into an extremely oversold zone. Bargain hunting has probably been the reason for renewed investors’ confidence (read: Is This the Time to Buy China ETFs on Bargain?).

TIPS ETF Gain Momentum

iShares TIPS Bond ETF TIP added about $1.47 billion in assets in August on rising inflation. The U.S. consumer price inflation rate stood at 5.4% in July 2021, unchanged from the previous month's 13-year high and slightly above market expectations of 5.3%. No wonder, investors’ rushed toward the inflation-protected assets like TIPS ETFs.

Mid-Cap ETFs Amass Assets

Vanguard Mid-Cap ETF VO added about $1.29 billion in the month. Reflationary cues increased benchmark U.S. treasury bond yields in the month. This has brought back investors’ favor to the value corner of investing.

Financial ETFs Gain Strength

Financial Select Sector SPDR Fund XLF amassed assets like $1.23 billion. There was steepening of the yield curve in the month on taper talks. The benchmark treasury yield started the month with 1.20% while it reached a high of 1.36% in mid-August and stood at 1.31% on Aug 27. The movement of the yield curve favored the financial ETF.

Gold Loses Strength

SPDR Gold Trust GLD lost $1.69 billion in assets. Invesco DB US Dollar Index Bullish Fund (UUP) is up 0.8% in the month. While taper talks and likely strength in the greenback weighed on the gold investing, rising stock markets also kept investors away from gold.

Energy Out of Favor

BothEnergy Select Sector SPDR Fund (XLE) and SPDR S&P Oil & Gas Exploration & Production ETF (XOP) lost about $587 million and $404.5 million in the month. Rising virus cases probably went against energy investing.

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SPDR Gold Shares (GLD): ETF Research Reports
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
iShares TIPS Bond ETF (TIP): ETF Research Reports
iShares iBoxx Investment Grade Corporate Bond ETF (LQD): ETF Research Reports
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
Vanguard S&P 500 ETF (VOO): ETF Research Reports
KraneShares CSI China Internet ETF (KWEB): ETF Research Reports
Vanguard MidCap ETF (VO): ETF Research Reports
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