The iShares MSCI Emerging Markets (NYSEArca: EEM) also accumulated over $1 billion in new assets via net creation activity, demonstrating that these are genuine inflows from institutional managers and not simply “swaps” from one MSCI Emerging Markets Index fund to another (i.e. they are not “net zero” trades).
PowerShares QQQ (NasdaqGM: QQQ), which tracks the NDX which we mentioned above, also turned in a strong showing with $1 billion entering the fund last week. Following up from recent momentum was also SPDR Barclays Capital High Yield Bond (NYSEArca: JNK), which took in nearly $400 million in new assets and we spoke just last week of a “risk on” effect taking place in the corporate bond space via creation activity in JNK and iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) specifically that occurred in late January.
From an outflows standpoint, SPY lost about $3 billion in outflows despite the strength in the market, particularly on Friday. It seems that portfolio managers have been taking profits into the S&P 500 rally and are likely moving these proceeds into areas such as Emerging Markets or perhaps even to Technology via QQQ.
A sector specific ETF also saw heavy outflows, and that was Energy Select Sector SPDR (NYSEArca: XLE), as $1 billion left the fund as the ETF attempts to break out of a narrow trading channel. On that note, Oil, the commodity itself has been petering out lately so it is very possible that managers foresee weakness in Oil related equities and are simply leaving the sector for more appealing return possibilities elsewhere. Also on the outflows side, we saw about 15% of the assets outstanding in Currencyshares Japanese Yen (NYSEArca: FXY) leave the fund last week into recent strength in the currency itself. Likewise, heavier redemptions were also noted in iShares Hong Kong (NYSEArca: EWH) as the ETF traded at multi-month highs.
It is clear that there has been some strategic rebalancing going on in institutional portfolios to begin the month of February, and we will continue to monitor such flows in the coming weeks in order to observe any sea change in events.
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