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US Equities Continue to See Outflows on Global Growth



Continuous outflows

In the week ended September 4, 2015, US equities saw total outflows of $1.6 billion compared to outflows of $1.4 billion in the previous week. The rate of equity outflows rose due to investors pulling out funds on slowing global growth, higher US equity valuations, and falling manufacturing activity.

The US economy’s fundamentals improved with a lower unemployment rate, higher growth in the service sector, and a declining trade deficit. Mutual fund companies such as American Funds, Vanguard, T. Rowe Price (TROW), and Janus Capital Group (JNS) would likely be negatively affected by a fall in investments.

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ETF investment outflows

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

In the week ended September 4, the Energy Select Sector SPDR ETF (XLE), the iShares Core S&P 500 ETF (IVV), the iPath S&P 500 VIX Short-Term Futures ETN (VXX), the Guggenheim S&P 500 Equal Weight ETF (RSP), the United States Oil ETF (USO), the Vanguard Total Stock Market ETF (VTI), and the PowerShares DB US Dollar Bullish ETF (UUP) saw a combined net outflow of $3.0 billion. Investors pulled money from energy, oil, and index funds.

ETF investment inflows

ETFs that attracted investments during the week ended September 4 include the SPDR S&P 500 ETF (SPY), the SPDR Barclays 1-3 Month T-Bill ETF (BIL), the iShares 1-3 Year Treasury Bond ETF (SHY), the iShares 7-10 Year Treasury Bond ETF (IEF), the iShares 20+ Year Treasury Bond ETF (TLT), the Vanguard Short-Term Bond ETF (BSV), the Vanguard S&P 500 ETF (VOO), the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), the iShares Short Treasury Bond ETF (SHV), and the Financial Select SPDR ETF (XLF). Together, these funds attracted $8.8 billion in investments.

Treasuries, corporate bonds, and financials attracted investments backed by macro factors. Asset managers such as State Street (STT), Vanguard, and BlackRock (BLK) are major players in ETF offerings in the United States, Europe, and Asia.


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