August ETF Data: Reversing Course

by on September 3, 2010 | ETFs Mentioned:

The monthly ETF statistical bulletins have become somewhat predictable in recent months, as continued inflows into the ETF industry have been about as certain as death and taxes. So the latest figures from the NSX came as a bit of a shock; total ETF assets declined from about $835 million to $815 million during the month of August. And while much of that drop was attributable to falling asset values, the industry also saw cash outflows for only the second time this year.

Cash outflows in August totaled $1.9 billion, though that figure would have been positive if not for the S&P 500 SPDR (SPY), which saw $6.6 billion of outflows. The last time the ETF industry saw net outflows for a month was in January, when a little more than $17 billion went out the door. Every month since then has been positive, with about $66 billion flowing into exchange-traded products during those six months.

Vanguard continued to gain ground on competing issuers, hauling in $3.7 billion for the month. August was also a good month for leveraged ETF issuers; ProShares and Direxion took in $1.2 billion and $516 million, respectively, perhaps reflecting an increase in usage of leveraged products in the volatile environment. Global X also continued to accumulate assets, taking in another $75 million to bring its total close to $450 million.

From an asset class perspective, the shift from domestic equities to international funds continued in August. Outflows from U.S. funds weren’t limited to SPY, as more than $12 billion flowed out of U.S. stock ETFs in total. Inflows to international equity funds topped $4.5 billion, with much of that total attributable to emerging markets funds; EEM raked in $1.8 billion while another $1.9 billion flowed into VWO.

But it wasn’t just the big dogs of the emerging markets ETF space that prospered in August, as a number of smaller funds enjoyed banner months:

  • iShares MSCI Turkey Index Fund (TUR): Inflows of $98 million, or almost 20% of the previous month’s assets.
  • iShares MSCI Thailand Index Fund (THD): Inflows of $144 million, or 44% of July assets.
  • SPDR S&P Emerging Markets Small Cap ETF (EWX): Inflows of $75 million, or 18% of July assets.
  • WisdomTree Emerging Markets Small Cap Dividend Fund (DGS): Inflows of $77 million, or 20% of July assets.
  • PowerShares DWA Emerging Markets Technical Leaders (PIE): Inflows of $92 million, or 174% of July assets.
  • Claymore/BNY Mellon Frontier Markets ETF (FRN): Inflows of $52 million, or almost 90% of July assets.
  • Global X/InterBolsa FTSE Colombia 20 ETF (GXG): Inflows of $23 million, or 70% of previous month assets.

Perhaps the most successful month was turned in by the WisdomTree Emerging Markets Local Debt Fund (ELD). After launching in early August ELD finished the month with close to $200 million, making it one of the most successful ETF debuts in recent memory.

Other big movers in August included:

  • Junk bonds were also popular in August as investors continued their hunt for decent yields; aggregate inflows to HYG, JNK, and PHB topped $900 million.
  • PowerShares lineup of small cap sector-specific ETFs gained traction in a big way in August; aggregate monthly inflows of more than $150 million represent more than 300% of the previous month’s asset total for the nine funds.
  • Commodities once again attracted investor interest after July witnessed outflows. Once again investors raced into the natural gas ETF as the share price sank; UNG lost nearly a quarter of its value but had inflows of almost $250 million [see How UNG Lost 23% In August]. Gold also remained hot; inflows to the three physically-backed funds (GLD, IAU, SGOL) topped $1.1 billion.

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Disclosure: No positions at time of writing.