February 2014: Mixed signals drive bond ETFs through the first week
Investors pulled out more than $9.79 billion from ETFs in the week ended February 6, bringing down the total U.S.-listed ETF assets by 4 % to $1.625 trillion. After the financial crisis, ETFs relied heavily on equities in 2013, as the S&P 500 Index went up by around 30% during the year. The market has fallen by around 4% in 2014, as economic data show elevated level of uncertainty.
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Also, concerns in other parts of the globe such as Japan and Europe about an asset-price bubble in the emerging markets added to investors’ dilemma. Although it is a little farfetched to talk about any ensuing crisis, uneasiness in investor sentiments led to a surge in demand of bond ETFs. Plus, there was the concern in other parts of the world, such as Japan and Europe, that an asset-price bubble that has been growing in the emerging markets over the past five years may be deflating. A flight to bond ETFs would negatively affect equity ETFs like IJR which has FEI Company (FEIC) and Questcor Pharmaceuticals, Inc. (QCOR) in its portfolio.
The iShares 1-3 Years Treasury Bond ETF (SHY) led all bond funds, raking in $3.7 billion last week and bringing its total assets up to $11.86 billion. The SPDR S&P 500 (SPY) was the least popular ETF last week, redeeming $8.63 billion and bringing its assets down to $144 billion.