Monthly ETF Fund Flows
Feb. ETF Fund Flows: Energy On Fire
March 01, 2011
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Investors in February piled into energy-related equities and other commodities ETFs while clamoring out of emerging markets holdings, as unrest in the oil-rich Middle East spooked investors. Almost $7.61 billion flowed into U.S. exchange-traded products, lifting assets 0.72 percent to a record $1.056 trillion.
Some of the money moving out of developing market funds moved into U.S. equity ETFs, many of them energy-related. The unrest in Egypt that dominated news headlines in the first half of February led investors to take measure of emerging markets risk in general and seek safer havens or more prospective parts of the investment universe.
Those concerns morphed into fear about global growth as the unrest spread and turned violent in Libya, a country that produces more than 1.5 million barrels of oil a day, or about 2 percent of global output. Crude prices are near $100 a barrel, fueling flows into the energy sector. Libya appears to be slipping into civil war, and concern is growing that the unrest could be spreading into countries with more crude output than Libya, such as Iran and Saudi Arabia.
Last month’s most popular fund was the Energy Select SPDR ETF (NYSEArca: XLE), which gathered $1.57 billion and ended February with $10.93 billion in assets. XLE’s flows were the single-biggest piece of U.S. equity creations, which totaled $3.40 billion. Commodities flows were meanwhile $2.34 billion and included big agriculture-related funds, according to data compiled by IndexUniverse.com.
Vanguard, the third-biggest U.S. ETF firm, again led all issuers in asset-gathering, just as it did last month and in all of 2010. The Valley Forge, Pa.-based company hauled in $2.58 billion last month, while San Francisco-based iShares, the biggest ETF sponsor in the world and a unit of BlackRock, collected about $2 billion.
The No. 2 U.S. ETF firm, State Street Global Advisors, meanwhile suffered outflows of $2.87 billion, largely because its two biggest funds, the SPDR S&P 500 ETF (NYSEArca: SPY) and the SPDR Gold Shares (NYSEArca: GLD), had redemptions of $1.37 billion and $712 million, respectively.
Energy And Commodities Rising
Apart from XLE, which topped IndexUniverse.com’s “Top Gainers” table above, the Merrill Lynch-sponsored Oil Services HOLDRS (NYSEArca: OIH) raked in $618.8 million in new money last month, lifting assets to $3.17 billion.
Also, the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP) attracted $394.2 million, bringing total assets in the fund to $1.43 billion.
In the commodities realm, the futures-based PowerShares DB Agriculture ETF (NYSEArca: DBA) gathered $566 million. The fund’s success at attracting assets reflects rocketing prices on many crops, including cotton, which is at record levels.
The noteworthy exception among commodities funds was SSgA’s physical gold ETF GLD, which lost $712 million in assets, as noted above. But those redemptions may have less to do with gold as a safe haven and more to do with the GLD’s competitive position. Indeed, the iShares Gold Trust (NYSEArca: IAU), which costs less than GLD, gathered $341.7 million last month. GLD has an annual expense ratio of 0.40 percent, compared with 0.25 percent for IAU.
Also, the iShares Silver Trust (NYSEArca: SLV) hauled in $310.1 million, lifting assets in the physical fund to $11.51 billion.