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Most Loved/Hated ETFs of Q4

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Sanghamitra Saha
·3 min read
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Wall Street saw a stellar fourth-quarter, with SPDR S&P 500 ETF Trust (SPY) adding 11.2%, SPDR Dow Jones Industrial Average ETF Trust (DIA) rising 10%and Invesco QQQ Trust (QQQ) gaining about 12.9% in the past three months (as of Dec 29, 2020).

Vaccine rollouts, stimulus hopes and Joe Biden’s win with a divided Congress regulated the ETF world in the fourth quarter. Against this backdrop, let’s see which ETFs raked in solid assets and the ones that lost.

Equities Win

Vanguard Total Stock Market ETF VTI garnered about $13.76 billion in assets in the fourth quarter. Though still not out of woods, the U.S. economy is showing signs of improvement from the COVID-induced slump. With vaccine hopes, investors’ confidence in the global economy has returned.

International ETFs Are Hot

International ETFs like Vanguard Total International Stock ETF (IEFA) and iShares Core MSCI Emerging Markets ETF (IEMG) have been dear to investors on receding global growth worries.VXUS and IEMG attracted about $7.10 billion and $5.20 billion in the fourth quarter. Investors should note that subdued greenback has offered support to the emerging market stocks and ETFs in the fourth quarter (read: U.S. Dollar to Remain Weak in 2021? ETFs to Gain).

Total Bond Market Prevails

Vanguard Total Bond Market ETF (BND) andVanguard Total International Bond ETF (BNDX) haveadded about $5.50 billion and $4.35 billion in assets. A dovish Fed, ECB, BoJ and several emerging economies kept global interest rates subdued and made these bond ETFs attractive to investors.

iShares Core U.S. Aggregate Bond ETF (AGG) attracted about $4.13 billion in assets. Notably, BND and AGG are higher-yielding in nature, offering about 2.38% and 2.15% annually. This attribute made them winners amid the low-yield environment.

Financials Rule

Steepening yield curve as a result of risk-on sentiments boosted bank stocks in the fourth quarter. In any case, financial stocks were beaten down this year and offered attractive bets at the start Q4.

Moreover, the Fed recently announced that it will allow the nation’s largest banks to restart share buybacks in the first quarter of 2021 subject to certain rules.Financial Select Sector SPDR Fund (XLF) garnered about $3.89 billion in assets.

Gold Loses Its Sheen

As the broader market rallied, investors dumped this safe-haven metal.SPDR Gold Trust (GLD) lost about $60 billion in assets.

Treasuries Slacked

iShares 7-10 Year Treasury Bond ETF IEF, iShares Short Treasury Bond ETF (SHV) and iShares 1-3 Year Treasury Bond ETF (SHY) lost about $4.89 billion, $2.24 billion and $1.79 billion in assets in the quarter as investors’ attraction for safe-havens took a backseat and intermediate and short-term treasuries yielded lesser than total bond market products.

Low-Volatility ETFs Out of Favor

This is another loser of the soaring stock market. iShares MSCI USA Min Vol Factor ETF (USMV) which gives exposure to low-volatility stock and relatively defensive in nature, saw about $2.59 billion of assets gushing out.

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Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
SPDR Gold Shares (GLD): ETF Research Reports
 
iShares 710 Year Treasury Bond ETF (IEF): ETF Research Reports
 
iShares MSCI USA Min Vol Factor ETF (USMV): ETF Research Reports
 
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
 
iShares Core U.S. Aggregate Bond ETF (AGG): ETF Research Reports
 
iShares Core MSCI EAFE ETF (IEFA): ETF Research Reports
 
Vanguard Total Bond Market ETF (BND): ETF Research Reports
 
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Zacks Investment Research
 
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