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ETFs With Largest Outflows Of The Year

Sumit Roy

As record amounts of money have come into U.S.-listed exchange-traded funds this year, products of all stripes have seen interest from investors. But even in a year in which $200 billion has rushed into the space in only five months, it's not hard to find at least a few ETFs that have fallen out of favor with investors.

The SPDR S&P 500 ETF Trust (SPY)―the world's largest and most liquid ETF―is one of those. Its redemptions of $6.8 billion in the year-to-date period through May 31 were enough to put it at the No. 1 spot on the outflows list. SPY targets the same index as the iShares Core S&P 500 ETF (IVV) and the Vanguard S&P 500 ETF (VOO), but those funds saw a combined $21.6 billion worth of inflows in the same period that SPY lost billions.

That suggests that even among the cheapest ETFs, investors may be gravitating to the lowest-cost options. SPY's 0.09% expense ratio is low, however, IVV and VOO―both with expense ratios of 0.04%―are even cheaper.

SPY is also known to be popular among traders, while IVV and VOO are more popular among investors. That could mean that short-term traders are less enthusiastic than long-term investors about U.S. stocks after the recent surge in markets.

Cheap, But Not The Cheapest

Another pair of cheap-but-not-the-cheapest ETFs to see large outflows this year is the iShares Russell 2000 ETF (IWM), with an expense ratio of 0.20%, and the SPDR S&P Midcap 400 ETF Trust (MDY), with an expense ratio of 0.25%. IWM had outflows of $3.8 billion, while MDY had outflows of $1.1 billion through the first five months of the year.

The two funds target the broad market of U.S. small-caps and midcaps, respectively, but they're relatively expensive compared with other ETFs that target the same areas.

Aside from that, small and midcap U.S. stocks have underperformed their large-cap counterparts this year, which may also help explain the outflows.

 

3 Int’l ETFs Buck The Trend

Another notable ETF to see large redemptions this year is the VanEck Vectors Gold Miners ETF (GDX). GDX's outflow of $1.3 billion was curious considering that gold prices jumped this year from $1,159/oz. to nearly $1,300. The share price of GDX also climbed more than 10% in the period.

Meanwhile, three international equity ETFs also made the outflows list. The iShares MSCI Mexico Capped ETF (EWW), the WisdomTree Europe Hedged Equity Fund (HEDJ) and the iShares MSCI Canada ETF (EWC) had outflows ranging from $633 million to $885 million in the year-to-date period.

On the whole, international equity ETFs attracted inflows of $74.6 billion this year, so these outflows are more the exception than the rule.

EWW, of course, has faced a difficult backdrop this year as Trump threatened to put tariffs on Mexico; EWC has been weighed down by the sell-off in oil prices; and HEDJ has been hurt by the ascendance of competing products that offer similar currency-hedged exposure to European stocks.

Only Fixed-Income ETF On The List

The only fixed-income product to make the bottom 10 outflows list was the iShares iBoxx $ High Yield Corporate Bond ETF (HYG). Its outflows of $1.3 billion were enough to put it at No. 4 on the list.

From a performance perspective, high-yield bonds have had a strong year. HYG returned 4.3% through May. 

 

Ticker Fund YTD Flows AUM % AUM
SPY SPDR S&P 500 ETF Trust  $(6,786.45) $235,864,080,741.00  -2.80%
IWM iShares Russell 2000 ETF  $(3,791.36) $34,921,930,890.00  -9.79%
GDX VanEck Vectors Gold Miners ETF  $(1,348.99) $9,061,160,515.00  -12.96%
HYG iShares iBoxx $ High Yield Corporate Bond ETF  $(1,262.93) $18,092,450,440.00  -6.52%
MDY SPDR S&P Midcap 400 ETF Trust  $(1,055.20) $18,474,830,393.00  -5.40%
FXN First Trust Energy AlphaDex Fund  $(1,052.67) $299,574,027.00  -77.85%
EWW iShares MSCI Mexico Capped ETF  $(884.67) $1,179,423,940.00  -42.86%
IWF iShares Russell 1000 Growth ETF  $(759.93) $35,980,530,810.00  -2.07%
HEDJ WisdomTree Europe Hedged Equity Fund  $(664.50) $9,760,351,070.00  -6.37%
EWC iShares MSCI Canada ETF  $(633.12) $2,930,410,420.00  -17.77%

 

Note: (Leveraged and inverse ETFs were not included in the data).

 

Contact Sumit Roy at sroy@ef.com.

 

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