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ETF Asset Report of October

Sanghamitra Saha

The S&P 500-based ETF SPY, Dow Jones-based ETF DIA and Nasdaq 100-based QQQ added about 3.3%, 4.9% and 1.8% in the past month (as of Oct 31, 2019). Announcement of the phase-one trade deal, Fed's rate cut, moderate earnings, marijuana crash and Brexit extension regulated the ETF world in October. Still, the value quotient prevailed in the market on worries of impending economic slowdown. Let’s delve a little deeper.

U.S. Equities Top

The S&P 500 reached a fresh high in October. In fact, there was a broad-based rally in the market on hopes of a trade deal and the Fed policy easing. No wonder, Vanguard Total Stock Market ETF VTI accumulated about $2.46 billion in assets in the month (read: 10 Top-Ranked ETFs Beating S&P 500 This Year).

Minimum Volatility & Quality Rule

Low-volatility products have the potential to outpace the broader market during turbulent times, providing significant protection to the portfolio. These funds comprise more stable stocks that have seen the least price movement.

Despite positive developments from the Fed and trade, concerns prevailed in the market.  Investors should note that despite easy money policies by the Fed this year, most of the economic data points came in weaker in September, be it manufacturing, retail or existing home sales. Consumer confidence came in at a fourth-month low in October. Business spending is also on the decline.

Although economic activity (+1.9%) in the United States has beaten expectations (+1.6%) in the third quarter, the momentum slowed down from the second quarter (+2%). It also lagged the Trump administration's forecast of 3% economic growth annually. 

So, iShares Edge MSCI Min Vol U.S.A. ETF USMV and iShares Edge MSCI U.S.A. Quality Factor ETF QUAL attracted about $1.54 billion and $1.41 billion in assets in the month, respectively (read: Fed Cuts Rates, Signals Pause: Trick or Treat for ETFs?).

Bonds Are Hot

Fears of a global slowdown and policy easing kept the treasury bond yields low in the month. This boosted demand for high-yielding assets.  iShares iBoxx USD High Yield Corporate Bond ETF HYG, which yields about 5.23% annually, hauled in about $1.54 billion in assets (read: Guide to 10 Most-Heavily Traded ETFs).

Small-Caps Are Out of Favor

Small-cap ETFs were not in much demand as iShares Russell 2000 ETF IWM lost about $1.20 billion in assets. U.S. slowdown fears have probably kept investors away from this segment.

Momentum ETFs Bled Assets

iShares Edge MSCI U.S.A. Momentum Factor ETF MTUM has shed about $1.09 billion in the month. The event can very well be attributed to investors’ lack of faith in the Wall Street rally in October.

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SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
 
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
 
iShares iBoxx $ High Yield Corporate Bond ETF (HYG): ETF Research Reports
 
iShares Edge MSCI USA Momentum Factor ETF (MTUM): ETF Research Reports
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
iShares Edge MSCI Min Vol USA ETF (USMV): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
iShares Edge MSCI USA Quality Factor ETF (QUAL): ETF Research Reports
 
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