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The global stock market logged in the worst year since 2008, losing around $13 trillion in market capitalization in 2018. U.S.-China trade woes and slower global growth were the major culprits. Rising interest rates in the United States, worries about increased regulation of the technology sector, political malaise in Europe and slowing growth in emerging and developed markets added to the woes.
Notably, United States and China together accounted for half of the losses made last year, sparking concerns over the nearly decade-long bull run (read: Biggest ETF Stories of 2018 Worth Watching in 2019).
Despite the diminished appeal for riskier assets, overall ETFs gathered about $309 billion in 2018, per eftf.com, marking the second-largest annual inflow. U.S. equity ETFs led the way, accumulating $132.9 billion followed by inflows of $85.4 billion for U.S. fixed income ETFs and $69 billion for international equity ETFs.
International ETFs: A Sweet Spot
iShares Core MSCI EAFE ETF IEFAwas the most loved ETF of 2018, pulling in nearly $20.8 billion in capital. This fund offers exposure to a broad range of companies in Europe, Australia, Asia, and the Far East. It has a Zacks ETF Rank #3 (Hold). iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) and Vanguard FTSE Developed Markets ETF VEAsaw inflows of $15.7 billion and $9.5 billion, respectively. While IEMG offers exposure to emerging markets, VEA targets the developed market. The duo has a Zacks ETF Rank #3.
On the other hand, iShares MSCI EAFE ETF (EFA - Free Report) , iShares MSCI Eurozone ETF (EZU - Free Report) and iShares MSCI Emerging Markets ETF (EEM - Free Report) saw outflows of $10.6 billion, $7 billion and $4 billion, respectively. All these funds have a Zacks ETF Rank #3 (read: 10 Most-Heavily Traded ETFs of 2018).
U.S. Equity ETFs Attracts
iShares Core S&P 500 ETF IVVand Vanguard S&P 500 ETF (VOO - Free Report) have accumulated $18.5 billion and $13.9 billion, respectively. This was followed by inflows of $13.9 billion for Vanguard Total Stock Market ETF (VTI - Free Report) and $8.5 billion for Vanguard Value ETF (VTV - Free Report) . VOO and IVV have a Zacks ETF Rank #2 (Buy) while VTV has a Zacks ETF Rank #1 (Strong Buy). VTI carries a Zacks ETF Rank #3.
The fixed income world gained investors' love amid persistent stock market volatility and higher yields. The 10-year Treasury yield touched its highest level since 2011, topping 3.25% in early October and then retreated below the highest level. Investors seeking protection from rising rates poured money into lower-dated bond ETFs like iShares Short Treasury Bond ETF (SHV - Free Report) , iShares 1-3 Year Treasury Bond ETF SHYand SPDR Bloomberg Barclays 1-3 Month T-Bill ETF BIL. These bond ETFs accumulated $12.7 billion, $9.3 billion and $9.3 billion, respectively. These products have a Zacks ETF Rank #4 (Sell) (read: Will 2019 See a Bull Market for Bond ETFs?).
However, rising yields and chances of further rates hike have dampened the appeal of high yield ETFs like iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD - Free Report) , SPDR Bloomberg Barclays High Yield Bond ETF (JNK - Free Report) and iShares iBoxx USD High Yield Corporate Bond ETF (HYG - Free Report) . The trio has pulled out $6.8 billion, $5.1 billion and $3.5 billion, respectively. LQD and JNK have a Zacks ETF Rank #4 (Sell) while HYG has a Zacks ETF Rank #5 (Strong Sell).
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Most Loved and Hated ETFs of 2018
The global stock market logged in the worst year since 2008, losing around $13 trillion in market capitalization in 2018. U.S.-China trade woes and slower global growth were the major culprits. Rising interest rates in the United States, worries about increased regulation of the technology sector, political malaise in Europe and slowing growth in emerging and developed markets added to the woes.
Notably, United States and China together accounted for half of the losses made last year, sparking concerns over the nearly decade-long bull run (read: Biggest ETF Stories of 2018 Worth Watching in 2019).
Despite the diminished appeal for riskier assets, overall ETFs gathered about $309 billion in 2018, per eftf.com, marking the second-largest annual inflow. U.S. equity ETFs led the way, accumulating $132.9 billion followed by inflows of $85.4 billion for U.S. fixed income ETFs and $69 billion for international equity ETFs.
International ETFs: A Sweet Spot
iShares Core MSCI EAFE ETF IEFA was the most loved ETF of 2018, pulling in nearly $20.8 billion in capital. This fund offers exposure to a broad range of companies in Europe, Australia, Asia, and the Far East. It has a Zacks ETF Rank #3 (Hold). iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) and Vanguard FTSE Developed Markets ETF VEA saw inflows of $15.7 billion and $9.5 billion, respectively. While IEMG offers exposure to emerging markets, VEA targets the developed market. The duo has a Zacks ETF Rank #3.
On the other hand, iShares MSCI EAFE ETF (EFA - Free Report) , iShares MSCI Eurozone ETF (EZU - Free Report) and iShares MSCI Emerging Markets ETF (EEM - Free Report) saw outflows of $10.6 billion, $7 billion and $4 billion, respectively. All these funds have a Zacks ETF Rank #3 (read: 10 Most-Heavily Traded ETFs of 2018).
U.S. Equity ETFs Attracts
iShares Core S&P 500 ETF IVV and Vanguard S&P 500 ETF (VOO - Free Report) have accumulated $18.5 billion and $13.9 billion, respectively. This was followed by inflows of $13.9 billion for Vanguard Total Stock Market ETF (VTI - Free Report) and $8.5 billion for Vanguard Value ETF (VTV - Free Report) . VOO and IVV have a Zacks ETF Rank #2 (Buy) while VTV has a Zacks ETF Rank #1 (Strong Buy). VTI carries a Zacks ETF Rank #3.
SPDR S&P 500 ETF Trust (SPY - Free Report) led the redemptions list with nearly $16.5 billion in outflows. This fund also has a Zacks ETF Rank #2 (read: How to pick the Best ETFs and Mutual Funds).
Fixed Income ETFs Still Gained Love
The fixed income world gained investors' love amid persistent stock market volatility and higher yields. The 10-year Treasury yield touched its highest level since 2011, topping 3.25% in early October and then retreated below the highest level. Investors seeking protection from rising rates poured money into lower-dated bond ETFs like iShares Short Treasury Bond ETF (SHV - Free Report) , iShares 1-3 Year Treasury Bond ETF SHY and SPDR Bloomberg Barclays 1-3 Month T-Bill ETF BIL. These bond ETFs accumulated $12.7 billion, $9.3 billion and $9.3 billion, respectively. These products have a Zacks ETF Rank #4 (Sell) (read: Will 2019 See a Bull Market for Bond ETFs?).
However, rising yields and chances of further rates hike have dampened the appeal of high yield ETFs like iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD - Free Report) , SPDR Bloomberg Barclays High Yield Bond ETF (JNK - Free Report) and iShares iBoxx USD High Yield Corporate Bond ETF (HYG - Free Report) . The trio has pulled out $6.8 billion, $5.1 billion and $3.5 billion, respectively. LQD and JNK have a Zacks ETF Rank #4 (Sell) while HYG has a Zacks ETF Rank #5 (Strong Sell).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>