October has a mixed reputation in financial markets. It is the last month in the worst six-month cycle for stocks, but it is also the month where some of history’s worst bear markets have died. Despite the government shutdown and the ensuing threat of a debt ceiling crisis, October 2013 has been a banner month for ETF inflows.
With nine trading days left in the month, $47 billion has already flowed into ETFs since the start of September, report Whitney Kisling and Nick Taborek for Bloomberg. Over the previous three months, a net $11 billion flowed into ETFs despite $29 billion in combined outflows in June and August.
Investors poured $7 billion in ETFs in a single day – October 17, the day policymakers reached an agreement to reopen the government, averting a debt ceiling debacle in the process. About $725 million went into ETFs on Oct. 16, $6.9 billion on Oct. 17, and $2.5 billion on Oct. 18 with the 17th being the best inflow day in a month, according to Bloomberg.
The recent inflow data jibe with predictions made earlier this year of 2013 proving to be a stellar year for the roughly $1.5 trillion ETF industry. In May, Nicholas Colas, chief market strategist at ConvergEx Group, said ETFs could see $200 billion in inflows this year. [ETF Inflows Could Hit $200B in 2013]
Since September 1, some of the largest ETFs have grown in significant fashion. For example, the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) has seen inflows of nearly $4.9 billion while the iShares Russell 2000 ETF (NYSEArca: IWM) has hauled in more than $1.3 billion. [Emerging Markets ETF Sees Inflows]
In just the past month, the PowerShares QQQ (NasdaqGS: QQQ), the NASDAQ 100 tracking ETF, has pulled in nearly $1 billion as the NASDAQ Composite has gained nearly 3.7% over the same time.
U.S. equity ETFs have pulled in $12 billion this month after attracting $14 billion in September, Bloomberg reported. Europe ETFs have not been slouches on the inflows front and that is especially true this month.
Since Oct. 1, the Vanguard FTSE Europe ETF (NYSEArca: VGK) has pulled in $467 million while the SPDR Euro STOXX 50 (NYSEArca: FEZ) has brought in $196 million.
Excluding special dividends, payouts from companies in the MSCI Europe ex-U.K. Index will rise 6.8% to $251.2 billion this fiscal year, research firm Markit recently said. [Bank on European Bank Dividends With These ETFs]
PowerShares QQQ
Tom Lydon’s clients own shares of EEM, IWM and QQQ.