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ETF Trading Report: Real Estate, Asia ETFs In Focus

Eric Dutram

Despite earnings beats from JP Morgan and Wells Fargo, equity markets slid on Friday the 13th as China’s GDP report overshadowed positive data on the earnings front. The Dow finished lower by about 1.05% while the broader indexes slumped more heavily as the Nasdaq and the S&P 500 lost 1.45% and 1.25%, respectively. With these losses, American indexes experienced their worst week of 2012 causing some to worry about the pace of the recovery going forward.

Thanks to these concerns, the U.S. dollar broadly strengthened against many of the world’s currencies, as the dollar index added nearly $0.50 on the day. This was largely due to a firm dollar against the European currencies although this was somewhat cancelled out by a more robust yen. This helped to push investors back into Treasury bills once again, causing the yield on the benchmark 10 year note to slump below the 2.0% mark yet again.

Meanwhile in commodity markets, most products faced weakness as investors fled for safe havens in the bond market. Cocoa was seemingly one of the only soft commodities that rose, while heating oil and natural gas also finished in the green as well. Besides these outliers, it was a pretty rough day in natural resource markets across the board (see Hard Times In Soft Commodity ETFs).

In ETF trading, many of the major equity ETFs saw outsized volumes thanks to the shaky situation in Europe and China. However, commodity ETFs did experience light trading pretty much across the board despite the move to the downside that many ETFs experienced in this segment.

One of the biggest trading outliers was in the real estate space as the iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index Fund (IFGL) saw a huge surge in volume. The ETF experienced saw nearly 800,000 shares change hands, extremely high considering the fund usually sees volume in the 62,000 share range (see Time For A Commercial Real Estate ETF?).

This huge jump came despite a relatively flat trading day in the real estate ETF as the fund lost just 0.6% on the day. However, the heavy component in Asia-Pacific securities (60%) could be the result of the added interest as traders look to position themselves given the slowdown in China’s growth rate.

Beyond IFGL, investors also saw another fund with a Pacific focus trade well outside its normal range; the iShares MSCI All Country Asia ex-Japan Index Fund (AAXJ). This ultra popular ETF saw volume reach the 3.7 million share level, an enormous increase from the 600,000 shares that usually change hands in the fund (read Southeast Asia ETF Investing 101).

Much like its real estate counterpart, this ETF probably saw volumes surge on the back of China’s weak growth report. China accounts for 22% of the ETF while Hong Kong is another 12% of assets, implying that this fund is driven by its Chinese exposure. Obviously given the weakness in China today, this wasn’t good news for those invested in the fund as the Asia ETF sank by 1.6% on this outsized trading volume.

See more on ETFs at the Zacks ETF Center.

Read the analyst report on IFGL

Read the analyst report on AAXJ

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  • Read the analyst report on IFGL, AAXJ