ETF Inflows Surpassed Last Year’s Total

US fixed income funds saw higher inflows

ETF inflows continued unabated last week despite downward pressure on the US market (MS). The US-listed ETFs saw net inflows of $4.2 billion, taking the year-to-date inflows to $289.4 billion and surpassing last year’s total of $287.5 billion. All other major asset classes saw healthy inflows during the week.

The US fixed income funds reclaimed the top slot with inflows of ~$1.7 billion. US equity (JPM) (BAC) (GS) funds followed with inflows of $718.0 million while international equity funds added $652.0 million.

ETF Inflows Surpassed Last Year’s Total

The PowerShares QQQ Trust ETF (QQQ) garnered the largest inflows of $974 million. The broader market ETFs such as the Schwab US Broad Market ETF (SCHB) had inflows of $701 million. Last week’s dip in the market saw investors pumping $352 million into the SPDR Gold Trust ETF (GLD).

Another standout was $428 million in inflows in the ProShares Short VIX Short-Term Futures ETF (SVXY), suggesting that traders used the hike in the VIX to short volatility.

The outflows were led by the Vanguard S&P 500 ETF (VOO) with $505 million, and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) had outflows of $437 million. The Financial Select Sector SPDR ETF (XLE) had redemptions of $342.6 million.

The Fed split over future rate hikes

The minutes from the Federal Reserve’s meeting held at the end of July showed that some officials favor delaying future rate hike decisions until there could be a sustained rise in inflation. However, some officials argued that a delay in rate hikes could spur inflation to higher levels that would be difficult to unwind.

Upcoming events

This week should see the release of manufacturing and services PMI for France, Germany, and the Eurozone. Canada should announce its retail sales data while the US plans to release new home sales and existing home sales data for July.

The UK plans to announce the second GDP estimate for the second quarter. In 2Q17, the UK economy advanced 0.3%. Japan plans to publish its inflation data for July.