Monthly ETF Fund Flows
March ETF Flows: Japan Revival Play
April 04, 2011
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Investors poured money into Japan in March, betting that as bad as the post-earthquake crisis now appears, the Land of the Rising Sun is likely to be a winner longer term. Overall, the ETF juggernaut kept gathering steam, as assets, including market gains, rose more than 2 percent to almost $1.079 trillion, a record.
Emerging markets also came back into favor last month after investors shed developing market equities in February amid all the unrest that is sweeping through the Middle East and North Africa. In March, it was developed market equities that came under fire from ETF investors, amid outflows of some of the biggest and most liquid U.S.-listed equity funds.
Japan’s disaster—which started on March 11 with a devastating earthquake and an even more destructive tsunami that has caused power plants at a nuclear complex to leak radiation—has morphed into the most dangerous electro-nuclear crisis since a unit at the Chernobyl plant in Ukraine exploded in 1986. But even so, investors are betting on the country’s long-term recovery by buying its equities.
The iShares MSCI Japan Index Fund (NYSEArca: EWJ) raked in $1.73 billion in new assets, making it the single most popular ETF last month. EWJ ended the month a $7.4 billion fund. The competing WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ), hauled in $261 million, more than doubling its assets to just shy of $500 million.
EWJ was also the top asset-gathering ETF in the whole first quarter, attracting $2.77 billion. Total flows in the quarter were almost $29 billion, and assets, including a rise in markets, climbed almost 7 percent, from the $1.009 trillion in U.S.-listed exchange-traded products at the end of 2010.
Vanguard gathered more than $10 billion in the first quarter, keeping the momentum that the Valley Forge, Pa.-firm had last year, when it led all ETF firms in asset collection. It is still the No. 3 U.S. ETF firm, but continues, by and large, to gather assets more quickly than its larger rivals, iShares and State Street Global Advisors.