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Gold ETF Is Making a Comeback

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Huge outflows out of US equity

Rising volatility in US stocks caused investors to worry about the likelihood of prolonged weakness in the market. Investors’ nervousness can be gauged by continued outflows from US-listed ETFs. Last week, ETFs saw total outflows worth $6 billion. US equity continued to see the highest outflows with net redemptions of $6.7 billion. In contrast, international equity added $4 billion. The US and international fixed income also registered outflows of $3 billion and $353 million, respectively. Commodities had moderate inflows of $93.4 million.

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Vanguard and VanEck ETFs shine

Two ETFs from Vanguard topped the inflows list. The Vanguard Growth ETF (VUG) and the Vanguard S&P 500 ETF (VOO) added $881.6 million and $851.6 million, respectively. With the rise in stock market volatility, demand for safe-haven investment like gold seems to be rising. The VanEck Vectors Gold Miners ETF (GDX) raked in $610.1 million. The VanEck Vectors Semiconductor ETF (SMH) also saw substantial inflows of $552.8 million.

Bond ETFs 

Outflows from the SPDR S&P 500 ETF Trust (SPY) continued last week. SPY had net redemptions of $4.8 billion followed by the PowerShares QQQ Trust (QQQ) with outflows of $1.6 billion. High-yield bond ETFs like the SPDR Bloomberg Barclays High Yield Bond ETF (JNK), the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) also had large outflows.

Upcoming events

The US will report existing home sales and new home sales data for January. Japan will release the balance of trade data for January. The United Kingdom will announce the second estimate for the GDP growth rate in the fourth quarter. The United Kingdom will also report the unemployment rate for December. Japan and Canada will release the inflation rate for January.

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