ETF Trends
ETF Trends

We point out scant equity inflows in recent sessions which has us wondering if the “Buy The Dip” effect has finally taken a pause heading into corporate earnings season amidst the latest round of global equity and commodity markets distress (Greece, China, Crude Oil, etc.), as the largest recipient of ETF inflows lately is actually a “Short Term Cash” Fixed Income product, SHY (iShares 1-3 Year Treasury Bond, Expense Ratio 0.15%).

Year to date, SHY has demonstrated a solid showing, pulling in more than $1.8 billion net now in new inflows, putting its asset base near $10 billion ($9.8 billion to be exact). The most recent round of inflows coupled with larger equity redemption flows that we have noted in some of the largest Equity Index products like SPY (SPDR S&P 500, Expense Ratio 0.09%), IWM (iShares Russell 2000, Expense Ratio 0.20%), and EEM (iShares MSCI Emerging Markets, Expense Ratio 0.67%) coupled with the larger than normal SHY inflows could certainly be a sign that equity bulls are starting to, and finally getting a bit nervous.

It makes sense with this all of a sudden “Risk-Off” dynamic that several on the street have pointed to in the past forty-eight to seventy-hours of trading to look at the other “Short Term Bond”
or “Cash” ETFs in the landscape as well to see if anyone is rushing in to raise cash reserves lately.

BSV (Vanguard Short Term Bond, Expense Ratio 0.10%) is actually the largest “Short Term Bond” ETF in the U.S. listed landscape with about $16.3 billion in assets under management, and this fund has pulled in about $480 million in new assets year to date.

SHV (iShares Short Treasury Bond, Expense Ratio 0.15%) is substantially smaller, with about $2 billion in AUM, and has actually seen substantial outflows year to date, in contrast to the two aforementioned funds SHY and BSV.

SHV has seen more than $1 billion pour out of the fund year to date. SCHO (Schwab Short Term U.S. Treasury, Expense Ratio 0.08%) also falls in this Fixed Income category, and has gathered $861 million in assets since its August 2010 inception.

With all of the previously mentioned funds falling within the “Short Term Bond” category, we should also be very cognizant of the “Ultra Short-Term” Bond (Money Market) ETFs for the same reasons as illustrated above, and will be looking at MINT (PIMCO Enhanced Short Maturity Strategy, Expense Ratio 0.35%), BIL (SPDR Barclays 1-3 Month T-Bill, Expense Ratio 0.14%), and GSY (Guggenheim Enhanced Ultra-Short Bond, Expense Ratio 0.30%) specifically.

iShares 1-3 Year Treasury Bond ETF

For more information on Street One ETF market commentary and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com

Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.