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The third-quarter was a downbeat period for investors, mainly due to rising rates. A cooling U.S. economy, falling consumer confidence, a real estate crisis in China, a series of bank downgrades also made matters worse for Wall Street.
However, all were not downbeat for the broader market as there were ebbing U.S. recession fears along with several upbeat economic data points and a decent Q2 earnings season.
The S&P 500 (down 3.4%), the Dow Jones (down 2.2%), the Nasdaq (down 4.3%) and the Russell 2000 (down 5%) – all four key U.S. equity gauges have slumped in the third quarter (as of Sep 28, 2023) (read: Best & Worst ETF Areas of Q3).
Against this backdrop, below we discuss the asset flow of the ETF industry in the third quarter.
S&P 500 & Broader Market ETFs Win
iShares Core S&P 500 ETF (IVV - Free Report) and Vanguard S&P 500 ETF (VOO - Free Report) amassed about $19.0 billion and $16.6 billion in the third quarter, respectively. Invesco S&P 500 Equal Weight ETF (RSP - Free Report) hauled in about $4.36 billion in assets in the quarter. Vanguard Total Stock Market ETF (VTI - Free Report) and Invesco QQQ (QQQ - Free Report) fetched in about $6.27 billion and $6.17 billion in assets in the quarter, respectively. Cheaper valuation probably lured investors to focus on these ETFs as the broader market underperformed in the third quarter.
Bond ETFs Were Not Far Behind
iShares 20+ Year Treasury Bond ETF (TLT - Free Report) have added about $4.91 billion in assets this year, despite a loss of 12.8%. Vanguard Intermediate-Term Treasury Index ETF (VGIT - Free Report) amassed about $4.16 billion in the third quarter. iShares 0-3 Month Treasury Bond ETF (SGOV) amassed about $4.70 billion in the quarter. Vanguard Total Bond Market ETF (BND) has amassed about $4.58 billion in the third quarter. Yields of these bonds were 3.57%, 2.52%, 4.13% and 3.03%, respectively.
Higher yields offered by the fund have probably led investors to stick to the fund. It also may happen that these ETFs were trading at a premium, i.e., its market price was higher than the NAV of its underlying assets, indicating higher demand for the ETF shares than supplies. Due to this discrepancy, an arbitrager may buy the underlying assets at their current market prices and then deliver these assets to the ETF issuer in exchange for new ETF shares, resulting in new unit creations and ETF asset growth.
Corporate Bond ETF: Biggest Loser
iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD - Free Report) has lost about $6.67 billion in assets in the quarter. The fund looks to track the Markit iBoxx USD Liquid Investment Grade Index. The fund yields 4.10% annually.
Emerging Market ETF Loses Assets
iShares MSCI Emerging Markets ETF (EEM - Free Report) shed about $3.71 billion in assets in the quarter. A higher greenback has weighed on the emerging markets ETF in this quarter. Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has gained 4.3% in the third quarter.
Gold Lost Luster
SPDR Gold Trust (GLD - Free Report) and iShares Gold Trust (IAU - Free Report) too have seen assets worth of $3.15 billion and $2.27 billion gushing out of the fund. With inflation falling, gold could not live up to its status of an inflation-protected asset. Plus, the strong greenback went against the gold prices.
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ETF Asset Report of Q3
The third-quarter was a downbeat period for investors, mainly due to rising rates. A cooling U.S. economy, falling consumer confidence, a real estate crisis in China, a series of bank downgrades also made matters worse for Wall Street.
However, all were not downbeat for the broader market as there were ebbing U.S. recession fears along with several upbeat economic data points and a decent Q2 earnings season.
The S&P 500 (down 3.4%), the Dow Jones (down 2.2%), the Nasdaq (down 4.3%) and the Russell 2000 (down 5%) – all four key U.S. equity gauges have slumped in the third quarter (as of Sep 28, 2023) (read: Best & Worst ETF Areas of Q3).
Against this backdrop, below we discuss the asset flow of the ETF industry in the third quarter.
S&P 500 & Broader Market ETFs Win
iShares Core S&P 500 ETF (IVV - Free Report) and Vanguard S&P 500 ETF (VOO - Free Report) amassed about $19.0 billion and $16.6 billion in the third quarter, respectively. Invesco S&P 500 Equal Weight ETF (RSP - Free Report) hauled in about $4.36 billion in assets in the quarter. Vanguard Total Stock Market ETF (VTI - Free Report) and Invesco QQQ (QQQ - Free Report) fetched in about $6.27 billion and $6.17 billion in assets in the quarter, respectively. Cheaper valuation probably lured investors to focus on these ETFs as the broader market underperformed in the third quarter.
Bond ETFs Were Not Far Behind
iShares 20+ Year Treasury Bond ETF (TLT - Free Report) have added about $4.91 billion in assets this year, despite a loss of 12.8%. Vanguard Intermediate-Term Treasury Index ETF (VGIT - Free Report) amassed about $4.16 billion in the third quarter. iShares 0-3 Month Treasury Bond ETF (SGOV) amassed about $4.70 billion in the quarter. Vanguard Total Bond Market ETF (BND) has amassed about $4.58 billion in the third quarter. Yields of these bonds were 3.57%, 2.52%, 4.13% and 3.03%, respectively.
Higher yields offered by the fund have probably led investors to stick to the fund. It also may happen that these ETFs were trading at a premium, i.e., its market price was higher than the NAV of its underlying assets, indicating higher demand for the ETF shares than supplies. Due to this discrepancy, an arbitrager may buy the underlying assets at their current market prices and then deliver these assets to the ETF issuer in exchange for new ETF shares, resulting in new unit creations and ETF asset growth.
Corporate Bond ETF: Biggest Loser
iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD - Free Report) has lost about $6.67 billion in assets in the quarter. The fund looks to track the Markit iBoxx USD Liquid Investment Grade Index. The fund yields 4.10% annually.
Emerging Market ETF Loses Assets
iShares MSCI Emerging Markets ETF (EEM - Free Report) shed about $3.71 billion in assets in the quarter. A higher greenback has weighed on the emerging markets ETF in this quarter. Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has gained 4.3% in the third quarter.
Gold Lost Luster
SPDR Gold Trust (GLD - Free Report) and iShares Gold Trust (IAU - Free Report) too have seen assets worth of $3.15 billion and $2.27 billion gushing out of the fund. With inflation falling, gold could not live up to its status of an inflation-protected asset. Plus, the strong greenback went against the gold prices.