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Wining ETF Areas of March

Sanghamitra Saha
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The month of March was all about the Fed rate hike, trade war fears, the tech market crash and a moderation in Treasury bond yields. Let’s see how investors reacted to this situation and where they parked their money in the month. The data are as of etf.com (as of March 29, 2018) (read: ETF Asset Report for First Quarter of 2017).

Developed Market Topped

Developed international equities scored strong inflows,brushing away all selloff fears. iShares Core MSCI EAFE ETF IEFA tracing Europe, Australia and Far East was the topper with about $4.72 billion inflows while Vanguard FTSE Developed Markets ETF VEA raked in about $743.3 million in the month.

Notably, despite targeting the EAFE market, iShares MSCI EAFE ETF EFA lost about $673.6 million in assets. This could be because of expense ratio differentials and EFA charges (32 bps in fees) much higher than IEFA (8 bps in fees) and VEA (7 bps in fees).

Small-Cap U.S. Equities Gained

At the end of the quarter, U.S. economic growth for Q4 was revised up from the previous estimate. GDP increased 2.9% in the last quarter of 2017 compared with the previously reported 2.5%, per the Commerce Department.

Since small-cap stocks have more domestic exposure, the capitalization is not likely to be disturbed by global risks. These are normally favored by positive developments in the United States.

Plus, small-caps are significantly expected to benefit from the tax reform, as the median effective tax rate is higher for small-cap stocks than large caps. This explains investors’ interest in small-cap equities. iShares Russell 2000 ETF IWM hauled in about $2.05 billion (read: 3 Small-Cap ETFs for Your Portfolio).

Staples Succeeded

Consumer Staples Select Sector SPDR Fund XLP garnered about $1.58 billion in the month as there was a gradual decline in the benchmark Treasury bond yields. The benchmark U.S. Treasury yield fell from 2.81% to 2.74% in March. Also, a broader market crash probably have  brightened the appeal for this safe sector.

Emerging Markets a Winner

iShares Core MSCI Emerging Markets ETF IEMG hauled in about $1.43 billion in assets in the month. Since the greenback remained subdued in March, emerging market investments brightened. Apart from this, the fundamentals are pretty pro-growth in emerging markets at the current level.

Internet ETFs Sizzled Despite Selloffs

Investors flocked to First Trust Dow Jones Internet Index Fund FDN despite the tech market crash. The fund amassed about $862.9 million in the month. Worries over Facebook’s handling of user data mainly triggered a selloff in technology shares in the middle of the month. But rising enterprise spending, the tailwind of tax cuts and other emerging technologies probably have pushed investors toward the fund (read: Is the Rout in Tech ETFs Transitory?).

Gold Miners Gained Too

VanEck Vectors Gold Miners ETF GDX gathered about $764.1 millionin the month as SPDR Gold Shares GLD gained about 0.3% in March. Acting as a leveraged play on the underlying metal prices, this mining ETF experienced better inflows than its bullion cousin. Notably, GLD garnered $643.9 million in assets in the month (see all material ETFs here).

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SPDR-CONS STPL (XLP): ETF Research Reports
GOLD (LONDON P (GLD): ETF Research Reports
ISHARS-R 2000 (IWM): ETF Research Reports
EMG MKT FREE AS (EFA): ETF Research Reports
VANECK-GOLD MNR (GDX): ETF Research Reports
FT-DJ INTRNT IX (FDN): ETF Research Reports
VANGD-FTSE DV M (VEA): ETF Research Reports
ISHARS-CR MS EA (IEFA): ETF Research Reports
ISHARS-CR MS EM (IEMG): ETF Research Reports
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