The 2014 trend of outflows from equity-based exchange traded funds is not abating. At least not yet.
Last month, investors pulled nearly $10 billion from exchange traded products after ETF inflows reached a record last year, topping $200 billion for the second consecutive year. Equity-based ETFs were the culprits, shedding $10 billion “and diverged from the strong starts seen in the past two years. Investors continued to turn to ETPs to efficiently execute their market views during a volatile month for stocks,” according to BlackRock. [ETFs Bleed $10 Billion in January]
January 2014 was the worst January since 2010 in terms of ETF outflows. Things are not getting better this month.
“ETFs – which have been reliably winning share over MFs since the Financial Crisis – are still in the red for 2014-to-date, at ($8.3) billion of outflows. Dig a little deeper into the ETF flows, and the mysteries compound. U.S. equity ETFs are down $24.7 billion in assets from redemptions, with three products accounting for essentially the entire ETF exodus from domestic stock funds,” said Nicholas Colas, chief market strategist at ConvergEx Group, a global brokerage company based in New York, in a note out Wednesday.
The three ETFs referenced by Colas are the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and the iShares Russell 2000 ETF (NYSEArca: IWM).
Colas notes that bond ETFs have been the beneficiaries of the flight from U.S. equity funds, raking in $17.1 billion in capital since the start of this year. Four of the top 10 ETFs in terms of year-to-date inflows and all of the top three are bond funds. [Bond ETFs Renew Safe-Haven Appeal]