Exchange traded fund flows over April suggest investors are taking a harder look at the cheap valuations in international markets after the post-Trump rally pushed U.S. markets toward loftier prices and new record highs. Additionally, low-cost ETF options remains a prominent theme as long-term investors try to optimize returns.
For instance, the iShares Core S&P 500 ETF (NYSEArca: IVV) was the most popular ETF play over the past month, attracting $6.6 billion in net inflows The Vanguard 500 Index (NYSEArca: VOO) was the fifth most popular play, bringing in $1.4 billion in inflows. In contrast, the SPDR S&P 500 ETF (NYSEArca: SPY) was the most hated ETF of the past month as investors yanked $4.3 billion out of the fund.
The shifting sentiment suggests that more long-term investors are leaning toward the cheaper IVV and VOO options – IVV has a 0.04% expense ratio and VOO has a 0.05% expense, whereas SPY comes with a 0.10% annual fee.
Both iShares and Vanguard ETFs have been attracting high inflows in recent years as investors and financial advisors increasingly turn to cheap, passive index-based funds to capitalized on the small improved total returns. In fact, the top ten ETFs with the highest inflows over the past month mostly include cheap iShares and Vanguard ETF options.
Along with the low-cost theme, international equities were also a big play over April. For instance, the iShares Core MSCI EAFE ETF (NYSEArca: IEFA) attracted $2.4 billion in inflows, iShares MSCI EAFE ETF (NYSEArca: EFA) added $1.6 billion and Vanguard FTSE Developed Markets ETF (NYSEArca: VEA) brought in $1.6 billion. The three ETFs all track developed markets outside the U.S., including developed European, Australasia and Far East countries. The iShares MSCI EMU ETF (NYSEArca: EZU), which tracks European Monetary Union or Eurozone states, also saw $1.1 billion in inflows.
Investors didn’t neglect the emerging markets either, funneling $1.3 billion into both the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG).
Traders also seemed to remain rather risk-on as the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) attracted $1.2 billion and iShares Russell 2000 ETF (NYSEArca: IWM) expanded by $956 million.
On the other hand, gold miner ETF dulled as investors pulled $1.0 billion from VanEck Vectors Gold Miners ETF (NYSEArca: GDX) and $600 million from VanEck Vectors Junior Gold Miners ETF (NYSEArca: GDXJ) over the past month.
Nevertheless, the magnitude of outflows from other less popular plays over the past month suggest that investors may just be either taking profits or reacting to short-term moves. For instance, among broad market options, the SPDR S&P MidCap 400 ETF (NYSEArca: MDY) saw $645 million in outflows, iShares Core S&P Small-Cap ETF (NYSEArca: IJR) shrunk by $380 million and PowerShares QQQ (NasdaqGM: QQQ) lost $283 million.
Among sector bets, the Vanguard REIT ETF (NYSEArca: VNQ) experienced $457 million in outflows, which may not be too surprising as we embark on a rising rate schedule ahead. The Financial Select Sector SPDR (NYSEArca: XLF) lost $439 million on concerns over earnings and the Trump administration’s ability to execute pro-growth policies. Additionally, the Health Care Select Sector SPDR (NYSEArca: XLV) saw $351 million in outflows on uncertainty over the Affordable Care Act.
Lastly, investors yanked $384 million from WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ).