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ETFs Taking In, and Losing, the Most New Capital in September 2013

Jon C. Ogg

Exchange traded funds (ETFs) almost undoubtedly have unseated mutual funds in their importance in the daily swings in the stock and bond markets. Mutual funds are still important to the markets, but these ETF inflows and outflows each minute of the day translate into millions upon millions of direct shares being bought and sold all throughout the day. Tracking mutual fund inflows has become a big business for index trackers, and IndexUniverse has released its September report.

ETFs took in a total of more than $32 billion in September alone, making the inflows a total of $56 billion in the third quarter. September's biggest inflows came into funds like the SPDR S&P 500 (SPY), with net inflows of $6.7 billion. Emerging markets became of interest again as well, with the iShares MSCI Emerging Markets ETF (EEM) seeing net capital inflows of $4.45 billion. The gain in share price in September alone was 2.7% in the SPY tracking the S&P 500 index, but the share price gains in the emerging market ETF of the EEM was a sharp 7.2%.

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After that $11.1 billion was accounted for almost one-third of all ETF capital inflows, we wanted to look at some of the other key inflows and were baffled to see that some Treasury ETFs were leaders for inflows after $4.4 billion in new capital ended up in debt funds. The iShares 3-7 Year Treasury Bond ETF (IEI) took in a total of $2.8 billion in new capital. Another $789 million ended up in the ProShares Ultra 7-10 Year Treasury ETF (UST).

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Longer-dated bond ETFs did not do well in inflows as investors are worried about losses in long-term bonds. The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) saw outflows of $478 million in September and $2.27 billion in the whole third quarter, while the iShares U.S. Preferred Stock (PFF) saw net outflows of $462 million in September and lost $1.30 billion in assets over the whole quarter.

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ETFs and Units tracking commodities lost $1.67 billion in the third quarter. This was mainly due to gold because the SPDR Gold Trust (GLD) saw $2.55 billion in lost assets in the quarter. That made the GLD the least popular ETF for the third quarter. The GLD performance was also bad with a loss in price alone of about 4.8% just in September.

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There were two more gainers in capital inflows for the third quarter in the report. One was the iShares Russell 2000 (IWM) with $3.86 billion in inflows, followed by the Vanguard FTSE Europe (NYSEMT:VGK) with some $3.83 billion in inflows.

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