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Most Loved and Hated ETFs of 2018

The global stock market logged in the worst year since 2008, losing around $13 trillion in market capitalization in 2018. U.S.-China trade woes and slower global growth were the major culprits. Rising interest rates in the United States, worries about increased regulation of the technology sector, political malaise in Europe and slowing growth in emerging and developed markets added to the woes.

Notably, United States and China together accounted for half of the losses made last year, sparking concerns over the nearly decade-long bull run (read: Biggest ETF Stories of 2018 Worth Watching in 2019).

Despite the diminished appeal for riskier assets, overall ETFs gathered about $309 billion in 2018, per eftf.com, marking the second-largest annual inflow. U.S. equity ETFs led the way, accumulating $132.9 billion followed by inflows of $85.4 billion for U.S. fixed income ETFs and $69 billion for international equity ETFs.

International ETFs: A Sweet Spot

iShares Core MSCI EAFE ETF IEFA was the most loved ETF of 2018, pulling in nearly $20.8 billion in capital. This fund offers exposure to a broad range of companies in Europe, Australia, Asia, and the Far East. It has a Zacks ETF Rank #3 (Hold). iShares Core MSCI Emerging Markets ETF IEMG and Vanguard FTSE Developed Markets ETF VEA saw inflows of $15.7 billion and $9.5 billion, respectively. While IEMG offers exposure to emerging markets, VEA targets the developed market. The duo has a Zacks ETF Rank #3.

On the other hand, iShares MSCI EAFE ETF EFA, iShares MSCI Eurozone ETF EZU and iShares MSCI Emerging Markets ETF EEM saw outflows of $10.6 billion, $7 billion and $4 billion, respectively. All these funds have a Zacks ETF Rank #3 (read: 10 Most-Heavily Traded ETFs of 2018).

U.S. Equity ETFs Attracts

iShares Core S&P 500 ETF IVV and Vanguard S&P 500 ETF VOO have accumulated $18.5 billion and $13.9 billion, respectively. This was followed by inflows of $13.9 billion for Vanguard Total Stock Market ETF VTI and $8.5 billion for Vanguard Value ETF VTV. VOO and IVV have a Zacks ETF Rank #2 (Buy) while VTV has a Zacks ETF Rank #1 (Strong Buy). VTI carries a Zacks ETF Rank #3.

SPDR S&P 500 ETF Trust SPY led the redemptions list with nearly $16.5 billion in outflows. This fund also has a Zacks ETF Rank #2 (read: How to pick the Best ETFs and Mutual Funds).

Fixed Income ETFs Still Gained Love

The fixed income world gained investors' love amid persistent stock market volatility and higher yields. The 10-year Treasury yield touched its highest level since 2011, topping 3.25% in early October and then retreated below the highest level. Investors seeking protection from rising rates poured money into lower-dated bond ETFs like iShares Short Treasury Bond ETF SHV, iShares 1-3 Year Treasury Bond ETF SHY and SPDR Bloomberg Barclays 1-3 Month T-Bill ETF BIL.  These bond ETFs accumulated $12.7 billion, $9.3 billion and $9.3 billion, respectively. These products have a Zacks ETF Rank #4 (Sell) (read: Will 2019 See a Bull Market for Bond ETFs?).

However, rising yields and chances of further rates hike have dampened the appeal of high yield ETFs like iShares iBoxx $ Investment Grade Corporate Bond ETF LQD, SPDR Bloomberg Barclays High Yield Bond ETF JNK and iShares iBoxx USD High Yield Corporate Bond ETF HYG. The trio has pulled out $6.8 billion, $5.1 billion and $3.5 billion, respectively. LQD and JNK have a Zacks ETF Rank #4 (Sell) while HYG has a Zacks ETF Rank #5 (Strong Sell).

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ISHARS-SH TB (SHV): ETF Research Reports
SPDR-BBC 1-3M T (BIL): ETF Research Reports
ISHARS-IBX IG (LQD): ETF Research Reports
SPDR-BBC HY BD (JNK): ETF Research Reports
VIPERS-VALUE (VTV): ETF Research Reports
ISHARS-1-3YTB (SHY): ETF Research Reports
ISHARS-IBX HYCB (HYG): ETF Research Reports
VIPERS-TOT STK (VTI): ETF Research Reports
ISHARS-EMG MKT (EEM): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
VANGD-SP5 ETF (VOO): ETF Research Reports
VANGD-FTSE DV M (VEA): ETF Research Reports
ISHARS-EMU IDX (EZU): ETF Research Reports
EMG MKT FREE AS (EFA): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
ISHARS-CR MS EA (IEFA): ETF Research Reports
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