February ETF Data: Back On The Right Track

by on March 2, 2010 | Updated March 3, 2010 | ETFs Mentioned:

After enjoying a record year in 2010, many in the ETF industry were disappointed when January figures revealed a material decline in total assets, breaking an impressive string of month-over-month expansion. The latest ETF statistics from the National Stock Exchange are out, and February results were more typical of the industry’s recent growth. Total ETF assets increased from about $745 billion to $765 billion, while monthly cash inflows totaled $5.4 billion.
The rebound started at the top of the product list, as the S&P 500 SPDR (SPY), which saw outflows of about $16 billion in January, took in $1.5 billion in cash last month. SPY, which now has over $70 billion in assets, remains the largest ETF by a wide margin over GLD, which comes in at just under $40 billion. In aggregate, 363 ETPs saw cash inflows, while 267 saw outflows on the month.

Top Ten YTD Cash Flows
VWO $2.1 billion
TIP $1.6 billion
CSJ $643 million
BND $640 million
SHY $620 million
SDS $589 million
VIG $489 million
VXX $440 million
XLI $424 million
PPLT $416 million
Source: NSX.com

One fund that continues to lose ground is the iShares MSCI Emerging Markets Index Fund (EEM), which saw $2.4 billion in outflows on the month. EEM’s primary competitor, the Vanguard Emerging Markets ETF (VWO) took in $1.1 billion, making it the sixth largest U.S.-listed ETF by assets and drawing it closer in size to its still-much-larger rival.

Both EEM and VWO track the MSCI Emerging Markets Index, but there are several significant differences between the two products, including a big gap in expense ratios (see Five Critical Differences Between VWO And EEM). EEM has now seen cash outflows of $2.4 billion on the year, by far the biggest drain of any U.S.-listed ETF.

Other ETFs that continue to be popular among investors include funds focusing on inflation-protected bonds (TIP) VIX futures (VXX), platinum (PPLT), and short-term bonds (CSJ, SHY).

Overall, Vanguard continued to gain ground on iShares, taking in $2.2 billion while iShares experienced cash outflows of $1.2 billion. Other issuers enjoying big February inflows included State Street ($2.7 billion), ProShares ($860 million), PowerShares ($620 million), and Direxion ($299 million). Several smaller issuers saw big gains in relative terms: monthly inflows for Schwab, PIMCO, Old Mutual, Global X, Emerging Global, and IndexIQ all topped 10% of January assets.

Domestic Equities Bounce Back

The rapid expansion in the ETF industry last year occurred despite big outflows from U.S. equity funds, as international equity, fixed income, and commodity products saw huge surges in popularity. January saw a partial reversal of that trend, as domestic equity ETFs brought in $4.9 billion in cash and international funds saw $2.3 billion in outflows. Fixed income continues to be popular, taking in $2.4 billion on the month, while commodity products lost nearly $1 billion in assets.

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Disclosure: No positions at time of writing.