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January ETF Asset Report

Sanghamitra Saha

The month of January was all about dovish Fed minutes, signs of development in the U.S.-China trade talks, an oil price rally and some reassuring earnings reports. While these factors heated up the global equity market despite winter chills, global growth worries did not stop haunting investors.  

Against this backdrop, let’s see how the start to 2019 impacted asset growth in the ETF industry in the first month of the year (as of Jan 29) (per etf.com ):

Gainers

Emerging Markets a Winner

Since the greenback remained subdued in January on dovish Fed minutes, scope for emerging market investments brightened. Plus, signs of improvement in the U.S.-China trade relation gave a boost to the segment. In fact, both the countries met to resolve trade issues at the end of January though chances of a far-reaching agreement are low.

iShares Core MSCI Emerging Markets ETF IEMG pulled in about $3.60 billion in assets in the month. iShares JP Morgan USD Emerging Markets Bond ETF EMB also raked in around $1.31 billion in assets (read: EM Equities ETFs Off to a Great Start in 2019: Here's Why).

Low Volatility & Quality ETFs Prevail

The International Monetary Fund (IMF) forecasts global growth of 3.5% for this year and 3.6% for the next. The forecast dropped 0.2 percentage points and 0.1 percentage point from the October report (read: IMF Cuts Global Growth Outlook: Bet on 5 Quality ETFs).

Since global growth worries remained alive and kicking even amid strong market conditions, investors injected about $1.74 billion in iShares Edge MSCI U.S.A. Quality Factor ETF (QUALassets. iShares Edge MSCI Min Vol U.S.A. ETF (USMV) amassed about $1.26 billion in assets in January.

Corporate Bonds Stayed Strong

Vanguard Short-Term Corporate Bond ETF (VCSH) and Vanguard Intermediate-Term Corporate Bond ETF (VCIT) have hauled in about $2.92 million and $2.48 million in assets, respectively. Both funds yield 2.63% and 3.55% annually.

Dovish Fed minutes kept the rise in bond yields in check. Probably this is why investors parked their money in investment-grade corporate bonds in quest of earning solid current income while keeping default risks low.

Safe Havens Rule

While subdued treasury yields attracted investors toward U.S. treasury ETFs like iShares 20+ Year Treasury Bond ETF (TLT) ($1.38 billion in asset growth) and iShares 7-10 Year Treasury Bond ETF (IEF) ($1.36 billion in asset growth), worries of trade and global growth uncertainty boosted the appeal for safe-haven metal SPDR Gold Trust (GLD).The fund added about $1.51 billion in assets (read: Four Solid Reasons to Buy Gold ETFs Now).

US Stocks Fall Out of Favor

The U.S. economy was under partial government shutdown for most part of January, which has probably made investors skeptical about the future of U.S investments.  The S&P 500-based ETFs like SPDR S&P 500 ETF Trust SPY, iShares Core S&P 500 ETF (IVV),iShares Russell 2000 ETF (IWM) and Invesco QQQ Trust (QQQ) have lost about $12.8 million, $6.9 million, $3.32 million and $1.20 million, respectively (read: ETF Winners & Losers in One-Month Long Government Shutdown).

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iShares 20+ Year Treasury Bond ETF (TLT): ETF Research Reports
 
iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB): ETF Research Reports
 
iShares Edge MSCI Min Vol USA ETF (USMV): ETF Research Reports
 
iShares 7-10 Year Treasury Bond ETF (IEF): ETF Research Reports
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
SPDR Gold Shares (GLD): ETF Research Reports
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
Vanguard Short-Term Corporate Bond ETF (VCSH): ETF Research Reports
 
Vanguard Intermediate-Term Corporate Bond ETF (VCIT): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
 
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