US Equities: Global Equity Concerns, Weakening Manufacturing



Continuous outflow

In the week ending August 21, US equities saw total outflows of $2.1 billion, compared to outflows of $1.0 billion in the previous week. Equity outflows increased due to investors exiting from equities globally on the expectation of lower growth.

Manufacturing activity in the US also declined. However, housing and construction activity improved in July. Walmart (WMT), Deere & Co. (DE), and Hewlett-Packard (HPQ) announced their results in the week ending August 21, 2015, with a decline in profits and revenues. Mutual fund companies such as American Funds, Vanguard, T. Rowe Price (TROW), and Janus Capital Group (JNS) would likely be negatively affected by the fall in investments.

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ETF investment outflows

The ETF market has fallen significantly over the span of just a decade to more than $3 trillion. US equities form more than 65% of the total allocation.

In the week ending August 14, the iShares Russell 2000 ETF (IWM), the SPDR S&P 500 ETF (SPY), the SPDR S&P Bank ETF (KBE), the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB), the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), and the iShares TIPS Bond ETF (TIP) saw a combined net outflow of $3.7 billion. Investors pulled money from the index, financials, and debt market.

ETF investment inflows

The ETFs that attracted investments during the week include the Vanguard S&P 500 ETF (VOO), the iShares MSCI USA Minimum Volatility ETF (USMV), the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), the iShares 1–3 Year Treasury Bond ETF (SHY), the PIMCO Enhanced Short Maturity Strategy ETF (MINT), the iShares MSCI USA Minimum Volatility ETF (USMV), the Energy Select SPDR ETF (XLE), and the Vanguard Total Stock Market ETF (VTI). Together, these funds attracted $2.3 billion in investments.

Energy, index, and Treasuries attracted investments backed by positive indicators in these sectors. Asset managers like State Street (STT), Vanguard, and BlackRock (BLK) are major players in ETF offerings across the US, Europe, and Asia.


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