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January ETF Asset Report

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The S&P 500 and the Nasdaq Composite added about 0.5% and 4% past month, respectively, and the Dow Jones lost about 1.3%. However, small caps were still a winner as the Russell 2000 ETF IWM gained 4.8% past month (as of Feb 1, 2021).

Stocks were at their all-time highs in first part of January on optimism over more stimulus from Washington (thanks to Democrats’ hold over Senate and Biden’s inauguration), the surge in coronavirus cases and some downbeat economic data points as well as the retail trading frenzy in some specific stocks in the month-end disbalanced the market momentum.

Against this backdrop, below we highlight the ETF areas that amassed assets meaningfully in the month and those that failed to do so.

U.S. Stock Market Top

The S&P 500 reached a fresh high in January. In fact, there was a broad-based rally in the market on hopes of fatter stimulus. No wonder, Vanguard Total Stock Market ETF (VTI - Free Report)  accumulated about $2.72 billion in assets in the month and became the highest asset grosser. iShares Core S&P 500 ETF (IVV - Free Report) , iShares ESG Aware MSCI USA ETF ESGU and Vanguard S&P 500 ETF VOO fetched in about $2.08 billion, $1.93 billion and $1.93 billion, respectively, in January.

Bond Markets Rule Too

Vanguard Total Bond Market ETF (BND - Free Report) and iShares Core U.S. Aggregate Bond ETF (AGG - Free Report) attracted about $2.13 billion and $2.13 billion, respectively, in January. Vanguard Intermediate-Term Corporate Bond ETF (VCIT) amassed about $1.85 billion in assets.

Fears of a global slowdown amid rising coronavirus cases and policy easing kept the treasury bond yields low in the month. Moreover, retail trading frenzy over GameStop (GME - Free Report) and silver bolstered by Reddit’s WallStreetBets forum caused momentum loss at the end of the month. This, in turn, probably led investors turn to the safe-haven bets like bonds (read: GameStop, Reddit Frenzy and Silver ETFs).

Small Caps in Favor Too

Small-cap ETFs were in much demand as Vanguard Small-Cap ETF (VB - Free Report) added about $1.78 billion in assets. Solid fiscal stimulus in the Biden Presidency drove investors toward this segment. This is especially true given that small-cap stocks are closely related to the domestic economy. VB yields 1.10% annually while it charges 5 bps in fees. However, iShares Russell 2000 ETF (IWM - Free Report) lost about $2.67 billion in assets probably because it charges more (19 bps in fees) and yields 0.97% annually.

High-Yield ETFs Bled Assets

iShares iBoxx USD High Yield Corporate Bond ETF (HYG - Free Report) has shed about $1.39 billion in the month, followed by SPDR Bloomberg Barclays High Yield Bond ETF (JNK) (exodus of $1.34 billion). Vanguard Short-Term Corporate Bond ETF (VCSH) lost about $1.17 billion in assets.

Value ETFs Out of Favor

iShares Russell 1000 Value ETF (IWD - Free Report) and SPDR Portfolio S&P 500 Value ETF (SPYV) shed about $1.23 billion and $710.9 million in assets, respectively. As rates treaded lower in the month, value investing lost its appeal.

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