ETF Flows in 30 Seconds: 5 Things That Matter



ETF flows—five things that matter

  1. The outperformance of the tech-focused PowerShares QQQ Trust (QQQ) continues. Notably, this is supported by robust capital inflows
  2. GICS Sector ETFs that touched fresh  YTD (year-to-date) highs, including the Health Care Select Sector SPDR Fund (XLV), the Technology Select Sector SPDR Fund (XLK), and the Financial Select Sector SPDR Fund (XLF), saw the largest capital outflows last week
  3. Boosting portfolio returns through cost-saving initiatives is becoming increasingly important. Last week, this was illustrated by investors pulling significant capital out of the SPDR S&P 500 ETF Trust (SPY), while pouring capital into ETFs that offer very similar exposure, but can be held at lower all-in costs. Two of these ETFs are the Vanguard S&P 500 Index Fund (VOO) and the iShares Core S&P 500 ETF (IVV)
  4. Emerging market equity ETFs continue to attract large capital inflows. In fact, fund inflows are becoming increasingly broader. Out of the ten country ETFs with the highest weekly inflows, four are focused on emerging market equities. These ETFs include the Vanguard FTSE Emerging Markets ETF (VWO), the iShares Core MSCI Emerging Markets ETF (IEMG), the iShares MSCI Emerging Markets ETF (EEM), and the iShares Edge MSCI Min Vol Emerging Markets ETF (EEMV)
  5. Emerging market equity ETFs aren’t just a yield story anymore. They’re also a low-volatility play. This is best illustrated in EEM’s six-month at-the-money implied volatility. It’s trading at one-year lows.

Some food for thought: Our Fund Flow Chart of the Week (below) illustrates the relative magnitude of EEM’s YTD capital inflows:

Intrigued? In Part 5 of this series, we provide a more detailed analysis of Emerging Market Equity ETF flows.

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