BlackRock (NYSE: BLK), the world’s largest asset manager and parent company of iShares, the larest ETF sponsor, released its monthly flows report for July on Monday and the data indicate a heated battle for third place among year-to-date ETF inflows.
The SPDR S&P 500 (NYSEArca: SPY) and the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) are locked in a tight battle for the top spot with SPY holding a nearly $250 million edge over DXJ, according to the BlackRock data. The distance in dollar terms between second-place DXJ and the iShares MSCI Japan ETF (NYSEArca: EWJ), in third place, is significant at over $3.5 billion, but the battle for third is more compelling.
As we noted last month, the Financial Select Sector SPDR (NYSEArca: XLF) is making a run at the 2013 inflows “bronze medal.” With the financial services sector standing as the only group to deliver impressive second-quarter earnings growth and the sector getting close to toppling technology for the largest weighting within the S&P 500, investors have been pouring cash into bank ETFs. [Citigroup Earnings Drive Bank ETFs]
Among U.S. sector funds, financial services ETFs attracted $2.3 billion in assets last month, bringing the year-to-date total to $7.8 billion, according to BlackRock. That is nearly twice the $4 billion that has gone into technology funds this year. XLF is leading the charge with $4.915 billion in year-to-date inflows.[XLF Sets Sights on Japan ETFs for Outflows Crown]
That puts XLF just behind the iShares Russell 2000 ETF (NYSEArca: IWM) in the race for fourth place and both funds have a legitimate shot at catching at EWJ for third. One reason IWM may be attracting new assets is because the fund has recently made a string of new all-time highs. [Small-Cap ETFs Powering Stocks to Record Highs]
Whether it means XLF offers value to long-term investors is up for debate, but the ETF is nowhere close to its all-time high. To get back to that area, around $38, XLF would have to gain another 83%. Taking matters one step at a time, if XLF can close above $22 in the near-term that will be the first time the ETF has done so in over five yeas and that could be enough to trigger new buying in the fund.
Financial Select Sector SPDR
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of DXJ, IWM and SPY.