The ETF industry had another solid month in October although the market conditions weren’t exactly favorable. More than a dozen new products hit the market—while more than a few were delisted—bringing the total number of ETFs close to the 1,440 mark with more than $1.28 trillion in total assets under management.
Among the highlights of the new funds that launched included a small group of ultra-cheap iShares funds—all of which have expenses less than 0.20%. Additionally, investors saw a few more tilt products hit the market, while a new yield king took center stage, MORL, thanks to its impressive 24% yield (with leverage).
In terms of inflows, the broad industry saw more than $700 million (in aggregate according to XTF.com) come into the market, led by strong showings in the rebranded iShares Core S&P 500 ETF (IVV - ETF report) and the iShares MSCI Emerging Markets Index Fund (EEM - ETF report). These two had, respectively, $2.15 billion and $1.26 billion of inflows, making them the only two to see more than one billion dollars in inflows for the month.
Beyond those two, investors showed a renewed interest in emerging markets such as with FXI and EWZ, while a host of bond and gold ETFs rounded out the top ten from an assets look (see Is WITE the Perfect Gold ETF Complement?).
On the losing side, investors have apparently abandoned SPY in droves, according to XTF.com, as the product lost almost $9.5 billion in total assets or close to 10% of its total. Beyond that popular fund, investors also headed for the exits in (QQQ - ETF report) to the tune of half a billion dollars, while mid cap focused ETFs were also unpopular, led by big asset losses in IJH and MDY.
Apparently, investors are temporarily tiring of SPY and QQQ, two of the most popular and well-known ETFs, along with many—although clearly not all—of the large and mid cap focused funds on the market. Instead, the focus continues to be, with the exception of EEM, on safety as that is the only thing that can explain the continued push to bonds and gold at this time (Read Three Defensive ETFs for a Bear Market).
In terms of performance, the Global X FTSE Greece 20 ETF (GREK - ETF report) was the winner among unleveraged, non-inverse products, as it added more than 23.6% in the month. This was followed by two carbon/global warning focused ETNs—GWO and GRN—while Chinese and coal ETFs rounded out the rest of the top ten.
On the downside, the Market Vectors Solar Energy ETF was the biggest loser, slumping by 14.5% in the time period. There wasn’t much rhyme or reason to rest of the bottom of the barrel, as a trio of ETNs rounded out the bottom four with CVOL, JJN, and SSDD occupying the spots.
If anything, it appears as though volatility products and industrial metals were among the hardest hit during October, along with the ever-weak solar industry (read Is It Finally Time to Buy the Solar Industry?).
Clearly, investors, despite the slump in the market, did see some strength in a few overlooked sectors. Not only are these segments often forgotten but they have been beaten down as well, suggesting some market rotation as we enter the final part of the year (read The Truth about Low Volume ETFs).
Lastly, it is also interesting to note how the industrial metal segment was by far the weakest, with both broad products and the various individual metal ETNs facing trouble in October. Whether this trend continues, especially with Sandy damaging so much in the Northeast, remains to be seen, suggesting that these metals could again be in focus in November as well.
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