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Weekly ETF Asset Round-Up: Equity Tops, Bonds Lag

Zacks Equity Research

Last week, the U.S. economy injected a fresh lease of life into the market, which has lately been troubled by Chinese hard landing fears, stretched equity valuations, oil price worries and some downbeat global economic data. The bulls have once again taken the center stage mainly because of an oil-rebound, though uncertainty is prevalent.

 

Let’s take a look at the ETF asset flow of last week to understand the changing perception of investors.

 

Improvement in the U.S. job scenario, inflation, manufacturing, construction spending, and housing and consumer spending data along with a spike in oil prices resulted in huge money inflows into the U.S. equity funds last week as per etf.com (as of March 3, 2016).

 

Asset Gainers

 

As a result, SPDR S&P 500 (SPY), an ETF that resembles the S&P 500 index, saw inflows of nearly $1.76 billion last week. This took the fund’s asset base to around $176.7 billion.

The return of risk-appetite was also validated by asset gains in the junk bond ETF space. The space has long been downtrodden. This was because that this segment has huge exposure in the energy market and includes debt issued when oil prices were at lofty levels.

 

Oil prices slid in early 2016, putting energy companies on the verge of default and pressure on junk bonds. However, recent risk-on sentiments in the market and an oil price recovery pushed investors to pour more than $1.16 billion and $1.13 billion in SPDR Barclays High Yield Bond ETF (JNK) and iShares iBoxx $ High Yield Corporate Bond (HYG) last week (read: How the Oil Crash Impacted the Junk Bond ETF World).

 

Investors’ interest in risky assets may be back, but probably not in a full-fledged way. As much as $1.31 billion asset inflows into the gold bullion ETF, SPDR Gold (GLD), revealed this. Gold demand has been surging lately on a safety bid. Investors continued interest in the yellow metal tells us that not only is volatility still present, the recent rally may also lose momentum any time soon (read: February ETF Asset Update: Safe Assets Gain; Stocks Shed).

 

Inflation-protected bond ETF iShares TIPS Bond (TIP) also gathered about $529 million in assets as the U.S. inflation outlook brightened on a relatively subdued U.S. dollar and recuperating energy prices (read: Do TIPS ETFs Deserve a Look as Inflation Rises?).

 

Asset Losers

 

The fixed income world saw outflows with iShares Short Treasury Bond ETF (SHV) topping the losers’ list, having shed about $1.22 billion in assets. Just as the U.S. economy started delivering upbeat data, talks over rate hike were back on the table (see all government bond ETFs here).

 

This will surely hamper investors’ interest in short-term Treasury bond ETFs as further Fed hikes would have the worst impact on the short-end of the yield curve. Another short-term bond ETF, iShares 1-3 Year Treasury Bond (SHY), saw a $330.9 million reduction in assets.

 

Ultra short-term investment grade bond ETFs including PIMCO Enhanced Short Maturity Strategy (MINT) and SPDR SSgA Ultra Short Term Bond (ULST) also lost $422.4 million and $179.7 million in assets, respectively, last week.

 

Apart from short-term bond ETFs, intermediate bonds products like iShares 3-7 Year Treasury Bond (IEI) and SPDR Barclays Intermediate Term Treasury (ITE) saw assets worth $374.8 million and $230.6 million, respectively, gushing out of the funds.

 

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SPDR-SP 500 TR (SPY): ETF Research Reports
 
SPDR-BC HY BD (JNK): ETF Research Reports
 
ISHARS-TIPS BD (TIP): ETF Research Reports
 
ISHARS-IBX HYCB (HYG): ETF Research Reports
 
ISHARS-SH TB (SHV): ETF Research Reports
 
PIMCO-E SMETF (MINT): ETF Research Reports
 
ISHARS-3-7YTB (IEI): ETF Research Reports
 
SPDR-BC IT TRS (ITE): ETF Research Reports
 
ISHARS-1-3YTB (SHY): ETF Research Reports
 
SPDR-SSGA US TB (ULST): ETF Research Reports
 
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