Monthly ETF Fund Flows
Sept. ETF Flows: EFA Tops Creations
October 04, 2011
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Investors poured $4.62 billion into U.S. ETFs in September, and into U.S. fixed-income funds in particular, amid market volatility driven by deepening anxiety about a worsening global-growth outlook. Indeed, market declines helped pull ETF assets down 8.5 percent to $973.5 billion.
The iShares MSCI EAFE Index Fund (NYSEArca: EFA) was the most-popular ETF both last month and in all of the third quarter, hauling in around $3 billion in both periods. ETF traders said the creations reflected either bargain hunting or an effort to meet demand to lend the shares to short-sellers who see more trouble ahead for the eurozone.
Despite third-quarter ETF inflows of more than $19 billion, the 14 percent decline in the S&P 500 Index during the quarter was enough to drag ETF assets down 11.4 percent in the July-September period. Markets seem to be coming to grips with what the eurozone’s deep debt problems, faltering U.S. growth as well as China’s slowing juggernaut mean to asset values.
Still, dollar-denominated assets, particular in fixed income, are looming largely these days, as investors turn defensive. U.S. fixed income hauled in more than $6 billion in new money last month, with the Vanguard Short-Term Bond ETF (NYSEArca: BSV) and the Vanguard Total Bond Market ETF (NYSEArca: BND) both on IndexUniverse’s “Top Gainers” table last month.
The dollar’s flight-to-safety role extended to ETFs such as the PowerShares DB US Dollar Index Bullish Fund (NYSEArca: UUP), which pulled in $736.5 million, or nearly 80 percent of its assets under management as of the end of August.
Equity funds focused on defensive sectors, such as health care and utilities, also got traction in September and in the third quarter. For example, the Utilities Sector Select SPDR ETF (NYSEArca: XLU) pulled in $641 million last month and $1.83 billion in the entire quarter. It had assets of $6.6 billion on Sept. 30.
From a fund-sponsor perspective, the world continues to look good for Valley Forge, Pa.-based Vanguard Group, which led all other companies in asset gathering in September, in the third quarter and in all of 2011 so far.
Vanguard remains the No. 3 ETF company by assets, but it continued to narrow the gap between it and the Nos. 1 and 2 firms, San Francisco-based iShares and Boston-based State Street Global Advisors.
Vanguard has pulled in more than $28 billion this year, more than twice the $13.82 billion iShares has gathered and more than six times the $4.64 billion SSgA has attracted.