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Q1 ETF Asset Report: Emerging Markets Win

Sanghamitra Saha

The markets were mostly upbeat in the first quarter of 2019 thanks to a dovish Fed, signs of improvement in the U.S.-China trade relation and oil price rally. However, global stocks skidded at March-end due to the emergence of recessionary fears. Slowdown in the eurozone and Brexit uncertainty also made matters worse (read: Markets in Red: Invest in Inverse ETFs for Solid Returns).

Let’s see how investors have reacted to this situation and where they parked their money in the first quarter. The data is from etf.com (as of Mar 26, 2019).

Emerging Markets Top

Since the greenback remained subdued in the first quarter as evident from a moderate 1.8% gain in Invesco DB US Dollar Bullish ETF UUP, emerging market investments improved. Apart from this, the fundamentals are pretty pro-growth in emerging markets at the current level unlike in 2013 (famous for taper-tantrum). iShares Core MSCI Emerging Markets ETF IEMG and iShares MSCI Emerging Markets ETF EEM hauled in about $5.16 billion and $2.47 billion in assets, respectively (read: Emerging Markets Most Crowded Trade Ever: 5 Hottest ETFs).

Bonds Win Globally

The first quarter has been all about the Fed’s dovishness and subdued interest rate environment. Naturally, this helped in boosting the appeal of intermediate-term bond ETFs, which are now facing less interest rate risks (read: Best-Performing Treasury ETFs Amid Market Selloff).

Vanguard Intermediate-Term Corporate Bond ETF VCIT, which yields 3.47% annually – way higher than the prevailing benchmark treasury yield – hauled in $3.53 billion in assets in the quarter. Vanguard Short-Term Corporate Bond ETF VCSH, which yields 2.66% annually, attracted about $3.35 billion in assets in the first quarter. Strong demand for yields probably made these ETFs popular.

Vanguard Total International Bond ETF BNDX, which yields 2.95% annually, too gathered about $2.99 billion in assets, as global growth worries are expected to keep most central banks dovish.  

Low Volatility ETF Makes to the Winning List

Due to persistent global growth fears, investors invested in the minimum volatility ETF. Also, Brexit uncertainty continued to bother global investors. Probably this is why, iShares Edge MSCI Min Vol U.S.A. ETF USMV added about $3.12 billion in assets in the quarter (read: Can Smart Beta & Factor ETFs Beat the Market?).

Several U.S. Equity ETFs Appear in List of Losers

The list of losers was topped by SPDR S&P 500 ETF Trust SPY, which has seen about $10.2 billion in assets bleeding. The renewed recessionary fears at the end of March probably made investors doubtful about the U.S. markets.

Apart from SPY, iShares Russell 1000 Value ETF IWD, iShares Russell 2000 ETF IWM and iShares Russell 1000 Growth ETF IWF shed about $3.82 billion, $3.09 billion and $1.78 billion in assets, respectively.

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iShares Edge MSCI Min Vol USA ETF (USMV): ETF Research Reports
 
Vanguard Short-Term Corporate Bond ETF (VCSH): ETF Research Reports
 
Vanguard Intermediate-Term Corporate Bond ETF (VCIT): ETF Research Reports
 
Invesco DB US Dollar Index Bullish Fund (UUP): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
iShares Russell 1000 Growth ETF (IWF): ETF Research Reports
 
iShares MSCI Emerging Markets ETF (EEM): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
Vanguard Total International Bond ETF (BNDX): ETF Research Reports
 
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
 
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