US ETF flows: ETF assets at all-time high

Mar 6th, 2012 | By | Category: Equities

Investment data provider Morningstar today reported US Exchange Traded Fund asset flows for February 2012. Following is a roundup of the key themes, AUM winners and losers.

US ETF flows - ETF assets at all-time high

International equity ETFs saw the largest inflows in February with $5.3 billion, of which diversified emerging market funds accounted for 96%.

February marked a high point for US exchange traded fund net assets. ETFs now hold $1.2 trillion, a 5% increase over a month prior. Overall, inflows were strong again in February. US ETFs gathered $14.7 billion and all US broad asset classes saw inflows during the month.

International-stock and taxable-bond ETFs registered the most prominent inflows, taking in $5.3 billion and $4.8 billion, respectively.

With $5.2 billion in inflows, Vanguard surpassed iShares for top monthly provider-level inflows in February. Across the providers’ respective product families, flows were directionally similar with one notable exception: iShares MSCI EAFE (EFA) gave up $1.7 billion. As it stands, iShares still holds the largest US ETF market share by a wide margin with nearly 42% of all ETF assets. That said, iShares’ market share has dropped by roughly 2% over the past year.

Irrational exuberance has taken hold in volatility investments. The category gained $1.5 billion in February. Total assets in the category grew by 42% last month and now stand at $3.6 billion. Inflows were so strong that VelocityShares 2X VIX Short-term ETN (TVIX) has suspended new creations.

Within the international-stock asset class, investors pushed into emerging markets and shied away from developed markets. Vanguard Emerging Markets (VWO) and iShares MSCI Emerging Markets (EEM) collected $2.4 billion and $1.6 billion, respectively, while iShares MSCI EAFE (EFA) bled $1.7 billion.

Diversified emerging-markets saw the largest category-level inflow in February with $5.0 billion, securing the category’s third consecutive month of inflows. These deposits made up more than 96% of the $5.3 billion total inflow into international-stock ETFs.

High-yield bond ETFs claimed the second-largest inflow by category, collecting $2.3 billion. The lion’s share of high-yield inflows went to SPDR Barclays Capital High Yield Bond (JNK), which picked up $1.2 billion. February inflows for high-yield bond ETFs were the second largest on record for the category. These offerings have seen only two months of mild outflows in the past 15 months.

In line with the pursuit of high yield, MLP offerings saw increased interest in February. JPMorgan Alerian MLP Index ETN (AMJ) and ALPS Alerian MLP ETF (AMLP) collected $362 million and $326 million, respectively, in February.

Primarily on the backs of the most popular gold offerings, the commodities asset class took in $3.2 billion last month. SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) picked up $1.3 billion and $308 million, respectively.

In aggregate, US-stock ETFs saw meagre inflows of $448 million. The large-blend category, which bled more than $5.0 billion in February, was to blame for much of the lacklustre performance. SPDR S&P 500 (SPY) gave up $3.8 billion in February, driving outflows for the large-blend category.

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