ETFs in a Recovery: Where the Money Is Going Now

September 23, 2009 at 3:00 pm by Tom Lydon      Bookmark and Share

ETF moneyMoney in the markets and exchange traded funds (ETFs) is continuously ebbing and flowing. As the market recovers, it’s always interested to take a look and see where the cash is going.

Last week, a solid majority of fund types reported their best weekly inflows of the year while money market funds experienced large outflows, writes Joe Morris for Ignites.

EPFR Global data shows where all the money has moved: $1.62 billion went into global bond funds, $540 million found its way into emerging-market bond funds, $925 million funneled into the real estate sector, $1.74 billion flowed into global equity funds, and money funds lost $47.2 billion.

Some ETFs representing these areas include:

  • SPDR Barclays International Treasury Bond Fund (NYSEArca: BWX): up 6.6% year-to-date

  • PowerShares Emerging Mkts Sovereign Debt (NYSEArca: PCY): up 37.7% year-to-date

  • iShares Dow Jones U.S. Home Construction (NYSEArca: ITB): up 37.2% year-to-date

  • SPDR S&P World ex-US (NYSEArca: GWL): up 25.9% year-to-date

  • WisdomTree U.S. Current Income Fund (NYSEArca: USY): up 2.1% year-to-date

Commodity sector funds also added $1 billion last week, accumulating more than $9 billion in year-to-date inflows.

  • iShares S&P GSCI Commodity Indexed Trust (NYSEArca: GSG): up 2.8% year-to-date

Investors are becoming more confident, but many still remain cautious about the market. U.S. bond funds have seen net inflows every week this year and recently saw an increase by $2.79 billion. Global bond funds have seen inflows for 23 straight weeks.

  • iShares Lehman 7-10 Year Treasury Bond Fund ETF (NYSEArca: IEF): down 5.4% year-to-date

Value funds are outperforming growth funds for the first time since late August. U.S. stock funds received $340 million, mid-cap ETFs, U.S. sector funds and actively managed big-cap growth funds all raked in new money as big-cap blend ETFs saw outflows.

  • Vanguard Total Stock Market (NYSEArca: VTI): up 22.8% year-to-date

  • Vanguard Large-Cap ETF (NYSEArca: VV): up 20.8% year-to-date

Max Chen contributed to this article.

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  • tomjefs
    Hi Tom,

    I read Better Business: Are ETFs as cheap as we are led to believe?
    http://www.ifaonline.co.uk/professional-adviser...

    I wonder if you have some counterponts?

    My own view is that ETFs and OEIC index trackers are generally both cheap anyway, relative to mutual funds. My own (legacy) Legal and General Japan Index Fund is slightly more expensive than a similar ETF from iShares but not a lot to lose sleep over. I do find some vanilla index trackers like Fidelity MoneyBuilder UK Index at 0.27% TER and HSBC's FTSE 100 at 0.27% TER hard to beat. My own db x-trackers FTSE All-Share (£) - XASX is 0.4%.Other ETFs can be a little higher as well:

    http://www.fool.co.uk/news/investing/investing-...
  • Not all ETFs should be considered "cheap." On average, they are cheaper than mutual funds, but some mutual funds are very cheap and some ETFs are very expensive. It's always wise to do your research before buying to find out if you're getting a good price.
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