John Gabriel is a strategist on the passive funds research team for Morningstar and head of Canadian exchange-traded fund research.
International Equity Funds Shine Again in November
On the back of another strong month for emerging-markets ETFs, the international equity category brought in the most assets among the broad asset classes in November. Vanguard Emerging Markets Stock ETF
led the way with $1.3 billion in net inflows. ( IShares MSCI Emerging Markets Index
, which charges an expense ratio of 0.72% versus 0.27% for VWO, saw $309.1 million in net inflows). Next were iShares FTSE/Xinhua China 25 Index
and iShares MSCI EAFE Index
, with $647.6 million and $331.0 million in net inflows, respectively.
ETF Flows ($Mil)
After Two Consecutive Months of Outflows, Domestic-Equity ETFs See Inflows
# of ETFs
Investors were voting with their wallets in favor of lower expense ratios in the domestic-equity category as well. With approximately $1.0 billion in new assets, Vanguard Small Cap ETF
topped the inflows list for U.S. stock ETFs in November. Investors poured another $471 million into Vanguard Small Cap Value ETF
and Vanguard Small Cap Growth ETF
. This was interesting, considering that iShares Russell 2000 Index
, iShares Russell 2000 Value Index
, and iShares Russell 2000 Growth Index
saw $868.6 million in combined net outflows over the same period. Each of the three aforementioned Vanguard ETFs levy expense ratios of just 0.15%, versus 0.24%, 0.33%, and 0.25% for IWM, IWN, and IWO, respectively.
As go the SPDRs
, so goes the U.S. stock ETF category. After two months of bleeding assets, the SPDRs saw $882.1 million of net inflows in November. Keep in mind when reviewing the category's year-to-date flow data, however, that the SPDRs' total year-to-date net outflows still stand at a whopping $32.2 billion.
Call it caution, or call it profit-taking. Whatever the case might be, we saw a combined $708.3 million exit Financial Select Sector SPDR
, SPDR KBW Regional Banks
, and SPDR KBW Banks
. Moreover, investors yanked a total of $737.6 million out of iShares Dow Jones US Real Estate
and SPDR Dow Jones REIT
Taxable Fixed-Income Funds Continue to Attract Assets
So far for the year to date, taxable-bond ETFs are the most popular of the major asset classes in terms of net inflows ($32.1 billion). The category had another strong showing in November, helped by broad fixed-income funds Vanguard Total Bond Market ETF
and iShares Barclays Aggregate Bond
, which saw a combined $493.9 million of net inflows.
But it was the usual suspects--aka Treasury Inflation-Protected Securities and short duration funds--that led the way for the category once again. Consistent with what we've witnessed in previous months, iShares Barclays TIPS Bond
topped the list for this category, with $516.9 million in net inflows in November. SPDR DB International Government Inflation-Protected Bond
also added another $121.8 million in the month.
Investors also continued to shy away from interest-rate risk while looking for a place to park their cash. For instance, Vanguard Short-Term Bond ETF
, iShares Barclays 1-3 Year Credit Bond
, PIMCO 1-3 Year US Treasury Index , iShares Barclays Short Treasury Bond
, iShares Barclays 1-3 Year Treasury Bond
, and SPDR Barclays Capital 1-3 Month T-Bill
combined saw $889.6 million in net inflows last month.
The Gold Rush Rolls On
Inflows into the commodity category over the past month were led by (you guessed it) SPDR Gold Shares
, which attracted more than $1.0 billion last month. In the year-to-date period, GLD alone has seen $11 billion in net inflows, or 44% of total category flows.
Investors also poured some $456.0 million into United States Natural Gas
and $207.6 million into United States Oil
ETF Investors Make Bullish Bet on the Greenback
Currency ETFs attracted $1.1 billion in net inflows in November ($2.3 billion for the year to date). At month-end there was $6.1 billion in total net assets invested across 29 currency ETFs.
Investors poured more than $670.4 million into PowerShares DB US Dollar Index Bullish . So far this year, UUP has brought in $1.1 billion in net new assets compared with just $193.1 million for its sister fund, PowerShares DB US Dollar Index Bearish .
Leveraged ETF Investors Continue to Prefer Daily Inverse Products
Investors poured a total of $579.7 million into leveraged, inverse, and leveraged inverse ETFs in November ($13.3 billion for the year to date). Still, leveraged "long" ETFs saw another $466.6 million in net redemptions (for the year to date, the group has seen $6.6 billion in net outflows). Investors were placing bearish bets last month, as evidenced by the $1.0 billion ($19.9 billion for the year to date) in net inflows for inverse ETFs. As of month-end, there was $11.5 billion invested across 62 "long" ETFs and about $20.0 billion invested across 89 "short" ETFs.
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