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July ETF Asset Scorecard

Like the last few months, the international market looked bright in July though the level of upper hand eased somewhat last month. SPDR S&P 500 ETF SPY – representative of the U.S. market –added about 2.3% in the last one month (asof July 28, 2017) while all-world ETF iShares MSCI ACWI ETF ACWI saw similar gainsof 2.9%.

The developed market fundiShares MSCI EAFE ETF EFA advanced about 2.5% in the month. Only emerging market was the bright star with iShares MSCI Emerging Markets ETF EEM returning about 6.2%.

Against this backdrop, let’s take a look at investors’ behavior toward ETF investments across the broad (per etf.com).

Developed Markets Rule

Investors should note that development in international markets have also looked up lately. This must have propelled investors to store cash in foreign-themed ETFs. iShares Core MSCI EAFE ETF IEFA, measuring large, mid and small-capitalization developed market equities, barring the U.S. and Canada, and Vanguard FTSE Developed Markets ETF VEA fetched about $3.88 billion and $985.2 million, respectively, in the month.

S&P 500 Keeps Up Momentum

Steady U.S. growth and blue-chip companies’ stronger corporate earnings continue to impress investors. iShares Core S&P 500 ETF IVV gathered over $3.60 billion in capital (read: ETF Asset Report: Developed Markets Rule in Q2).

Financials Saw Success Too

The financial sector has set a moderately upbeat tone this earnings season. Several factors including loan growth especially in the consumer segment and improvement in net interest income led to strong financial results. Five big banks of the U.S. crushed estimates on both lines while Wells Fargo came up with mixed results. Financial Select Sector SPDR Fund XLF gathered about $1.43 billion in assets in July (read: How Banking ETFs Are Behaving Post Earnings).

High-Yield Bonds on a Tear

Hopes of faster policy tightening recently gave a boost to Treasury bond yields. Though the Fed remained dovish in the month-end meeting, yields in the month hovered around 2.24% to 2.39%. The Fed indicated the start of the reverse QE process in the near term (read: Can Bond ETFs Continue Their Dream Run in 2017?).

So, investors hungry for yields set out to pour money into high-yielding ETFs like iShares iBoxx $ Investment Grade Corporate Bond ETF LQD, iShares iBoxx $ High Yield Corporate Bond ETF HYG and SPDR Bloomberg Barclays High Yield Bond ETF JNK. These funds attracted about $1.76 billion, $1.19 billion and $1.06 billion in the month, respectively.

Gold Lost Luster

Gold-related investments fell out of investors’ favor. SPDR Gold Trust GLD shed about $2.4 billion in assets. Same was the behavior of VanEck Vectors Gold Miners ETF GDX, which saw about $803.9 millionin assets gushing out of the fund.

Hedged Equities Out of Fashion

Currency-hedged developed market fund Deutsche X-trackers MSCI EAFE Hedged Equity ETF DBEF lost about $1.32 billion in assets.Weakness in the greenback coupled with strength in the euro weighed on hedged EAFE investing.

Japan’s Inflation Issues Makes Investors Grimace

Japan ETF iShares MSCI Japan ETF EWJ saw outflows of about $1.01 billion in July. Bank of Japan reduced the inflation forecast for fiscal years 2017/2018 and 2018/2019, which probably made investors cautious. After all, the Japanese economy has long been striving to boost inflation and is yet to see full-fledged success.

Real Estate: Another Weak Corner

July proved unlucky for real estate funds like iShares U.S. Real Estate ETF IYR too.This ETF lost about $819.9 million in the month. Rising rate worries probably wreaked havoc on this rate-sensitive fund.

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GOLD (LONDON P (GLD): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
SPDR-BBC HY BD (JNK): ETF Research Reports
ISHARS-JAPAN (EWJ): ETF Research Reports
ISHARS-EMG MKT (EEM): ETF Research Reports
ISHARS-IBX IG (LQD): ETF Research Reports
ISHARS-IBX HYCB (HYG): ETF Research Reports
SPDR-FINL SELS (XLF): ETF Research Reports
EMG MKT FREE AS (EFA): ETF Research Reports
VANECK-GOLD MNR (GDX): ETF Research Reports
ISHRS-MSCI ACWI (ACWI): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
DEUTS-XT MS HDG (DBEF): ETF Research Reports
ISHARS-US REAL (IYR): ETF Research Reports
VANGD-FTSE DV M (VEA): ETF Research Reports
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