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Fund Flows to China Financials Are Still Dwindling

Rebecca Keats

Comparing Fund Flows to Financial ETFs: XLF, EUFN, CHIX, and DXJF

(Continued from Prior Part)

Fund flows

Exchange-traded fund investors have withdrawn almost $22.7 million from the Global X China Financials ETF (CHIX) in the last three months. In comparison, the Financial Select Sector SPDR ETF (XLF) and the iShares MSCI Europe Financial Sector ETF (EUFN), witnessed outflows of $1.6 billion and $60 million, respectively, during the same period.

So far during the year, investors have withdrawn $47.4 million from the CHIX fund. Concerns of the Chinese economy has been worrying investors in emerging markets (EEM) and as a result, we are witnessing capital flight to developed economies.

Change in institutional investors’ holdings

Despite the negative flows to the CHIX ETF, the 13F filings of major institutional asset managers for the second quarter of 2015 give a positive picture.

In 2Q15, trade activity by 13F filers displayed a 97% increase in aggregate shares held by institutional investors and hedge funds. Among the 34 13F filers holding the stock, six funds reduced their exposure to CHIX, while one fund sold all its holdings of the ETF. In contrast, four funds created new positions and nine funds increased their exposure to CHIX.

Major institutional asset management firms like Janney Capital Management, Citadel Advisors, Susquehanna International Group, and Creative Planning were net buyers of CHIX. Institutions like Jane Street Group, Old Mission Capital, KCG Holdings, and Morgan Stanley (MS) sold their holdings of CHIX during the second quarter.

Among these, Old Mission Capital liquidated all its exposure to CHIX, while the others reduced their holdings. Other funds to sell their holdings of CHIX were UBS, Citigroup (C), and Bank of America (BAC).

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