Investors talked and ETFs sure listened in June.
While we’ve written about market rollercoasters and nail biters here on the blog before, this past month was a doozy, and we saw investors turn to ETFs to express their rapidly shifting market views.
Heading into June, global ETF flows were following a record-setting pace, breaking through the $100 billion mark. But market sentiment shifted toward the end of May when Fed Chairman Ben Bernanke signaled that the Fed could slow its bond-buying program. After Bernanke said on June 19 that the Fed could begin tapering its monetary stimulus before the end of 2013, yields on the 10-year Treasury jumped and global investors – who have become hypersensitive to central bank comments – reacted quickly, selling emerging markets equity, gold and fixed income ETFs.
June marked the first time global fixed income ETFs saw monthly outflows since December of 2010. Investors moved into shorter duration ETFs (which are generally less sensitive to interest rates and will lose less when rates rise), and the category attracted $5.5 billion of flows globally. But other fixed income maturity categories saw outflows of $13.5 billion globally.
In total, global ETF outflows for June totalled $8.2 billion, and it was the first month of outflows since November of 2011.