US equity outflows
In the week ending December 4, 2015, US equities saw total outflows of $3.4 billion, compared to $4.6 billion in the previous week. These equities saw outflows due to slow growth, the expectation of an interest rate hike in December, contraction in the manufacturing sector, and slowing growth in the services sector.
The US economy reported higher auto and home sales, but overall manufacturing activity fell due to the strong US dollar. Mutual fund companies such as American Funds, Vanguard, T. Rowe Price Group (TROW), and Janus Capital Group (JNS) are likely to be negatively affected by falls in investments.
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 total ETF allocation.
In the week ending December 4, 2015, the iShares 20+ Year Treasury Bond ETF (TLT), the iShares Nasdaq Biotechnology ETF (IBB), the iShares Russell 2000 ETF (IWM), the PowerShares QQQ ETF (QQQ), the iShares 3-7 Year Treasury Bond ETF (IEI), the iPath S&P 500 VIX Short-Term Futures ETN (VXX), the SPDR Barclays 1-3 Month T-Bill ETF (BIL), the SPDR S&P MidCap 400 ETF (MDY), and the Consumer Staples Select Sector SPDR ETF (XLP) saw a combined net outflow of $1.8 billion.
Investors pulled money from the treasury, biotechnology, volatility, midcap, and consumer funds.
ETF investment inflows
The ETFs that attracted investments during the week include the SPDR S&P 500 (SPY), the Vanguard FTSE Developed Markets ETF (VEA), the SPDR Barclays High Yield Bond ETF (JNK), the Financial Select SPDR ETF (XLF), the iShares MSCI Eurozone ETF (EZU), the Technology Select Sector SPDR ETF (XLK), the SPDR Dow Jones Industrial Average ETF (DIA), the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), and the iShares Core US Aggregate Bond ETF (AGG).
Together, these funds attracted $4.2 billion in investments.
Corporate bonds, technology, and financials attracted investments backed by positive indicators in these sectors. Asset managers such as State Street (STT), Vanguard, and BlackRock (BLK) are major players in ETF offerings across the United States, Europe, and Asia.
We’ll shift focus toward European equities in the next part of this series.