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Rebalancing of Russell Indices Buoy Last Week's ETF Inflows
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Wall Street enjoyed a smooth ride last week with the S&P 500 and the Nasdaq Composite Index hitting new highs. In fact, the S&P 500 logged the biggest weekly gain since February while the Nasdaq added 2.4%. Meanwhile, the Dow Jones gained 3.4%, capping its best week since mid-March.
The gains were driven by the continued acceleration in the world economy and optimism over the prospect of additional fiscal stimulus. President Joe Biden and a bipartisan group of senators agreed on a nearly $1 trillion infrastructure plan, which includes $579 billion in new spending on transportation like roads, bridges and rail, electric vehicle infrastructure, and electric transit, among other things. Inflation fears, which kept investors edgy in recent weeks, also eased after the Fed reiterated its view that inflation is temporary (read: ETFs to Gain on Biden's Infrastructure Deal).
Additionally, the latest personal consumption expenditures (PCE) data shows that a measure of underlying inflation rose less than expected in May, reducing worries about the sudden tapering in stimulus. Notably, the University of Michigan consumer survey’s one-year inflation expectation dropped to 4.2% in June from a decade-high 4.6% in May while the five-to-10-year inflation expectation fell to 2.8% this month from 3.0% in May.
Despite the bullishness, fund flows into ETFs slowed last week. Per etf.com, overall ETFs pulled in about $12.15 billion capital last week after adding a whopping $38 billion in the second week of June. This takes the total inflows to $468 billion year to date. Even though U.S. equity ETFs once again led the way higher last week with $5.8 million inflows, it is much lower than $27.3 billion accumulated in the week ending Jun 18. In fact, ETFs tracking Russell indexes continued to charge forward due to their rebalancing schedule. U.S. fixed income ETFs gathered $3.8 billion while international equity ETFs pulled in about $2 billion capital.
Given this, we have highlighted five funds that dominate the top creation list last week and can continue to be investors’ darlings:
IWF topped asset flow creation, gathering $6.8 billion in capital. It offers exposure to U.S. companies whose earnings are expected to grow at an above-average rate relative to the market by tracking the Russell 1000 Growth Index. It holds 498 stocks in its basket and charges 19 bps in annual fees. Information technology takes the largest share at 43.5% of portfolio while consumer discretionary, and communications round off the next two spots. The fund has amassed $74.6 billion shares and trades in an average daily volume of 1.2 million shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Growth ETFs Make a Comeback As Market Hits New Peak).
This fund has accumulated $4.7 billion in capital, taking its total AUM to $366.5 billion. It tracks the S&P 500 Index and holds 505 stocks in its basket with information technology, healthcare, consumer discretionary, financials and communication services being the top five, with a double-digit allocation each. The ETF charges investors 9 bps in annual fees and trades in an average daily volume of 61.6 million shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
With AUM of $17.8 billion, this ETF saw inflows of $2.3 billion. It offers exposure to mid-sized U.S. companies whose earnings are expected to grow at an above-average rate relative to the market by tracking the Russell MidCap Growth Index. It holds 390 securities in its basket with key holdings in information technology, healthcare, consumer discretionary and industrials. The product charges 24 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
This ETF has accumulated around $1.9 billion in its asset base last week. It provides exposure to small-cap U.S. companies that are thought to be undervalued by the market relative to comparable companies. It holds 1,388 stocks in its basket and is skewed toward the financials sector which holds 25.6% of the assets. Industrials, healthcare and real estate round off the next three spots. IWN has $19 billion and an average daily volume of 1.5 million shares. It charges investors 24 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Value Investing Wins in 1H: 7 Best-Performing ETFs).
This is the ultra-popular value ETF targeting large and mid-cap stocks with value characteristics. It follows the Russell 1000 Value Index, charging investors 19 bps in annual fees. It holds 841 stocks in its basket with financials, healthcare, industrials and information technology taking double-digit exposure each. The fund has gathered around $1.6 billion in capital, taking its total AUM to $55 billion. It trades in an average daily volume of 2.5 million shares and has a Zacks ETF Rank #1 with a Medium risk outlook.
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Rebalancing of Russell Indices Buoy Last Week's ETF Inflows
Wall Street enjoyed a smooth ride last week with the S&P 500 and the Nasdaq Composite Index hitting new highs. In fact, the S&P 500 logged the biggest weekly gain since February while the Nasdaq added 2.4%. Meanwhile, the Dow Jones gained 3.4%, capping its best week since mid-March.
The gains were driven by the continued acceleration in the world economy and optimism over the prospect of additional fiscal stimulus. President Joe Biden and a bipartisan group of senators agreed on a nearly $1 trillion infrastructure plan, which includes $579 billion in new spending on transportation like roads, bridges and rail, electric vehicle infrastructure, and electric transit, among other things. Inflation fears, which kept investors edgy in recent weeks, also eased after the Fed reiterated its view that inflation is temporary (read: ETFs to Gain on Biden's Infrastructure Deal).
Additionally, the latest personal consumption expenditures (PCE) data shows that a measure of underlying inflation rose less than expected in May, reducing worries about the sudden tapering in stimulus. Notably, the University of Michigan consumer survey’s one-year inflation expectation dropped to 4.2% in June from a decade-high 4.6% in May while the five-to-10-year inflation expectation fell to 2.8% this month from 3.0% in May.
Despite the bullishness, fund flows into ETFs slowed last week. Per etf.com, overall ETFs pulled in about $12.15 billion capital last week after adding a whopping $38 billion in the second week of June. This takes the total inflows to $468 billion year to date. Even though U.S. equity ETFs once again led the way higher last week with $5.8 million inflows, it is much lower than $27.3 billion accumulated in the week ending Jun 18. In fact, ETFs tracking Russell indexes continued to charge forward due to their rebalancing schedule. U.S. fixed income ETFs gathered $3.8 billion while international equity ETFs pulled in about $2 billion capital.
Given this, we have highlighted five funds that dominate the top creation list last week and can continue to be investors’ darlings:
iShares Russell 1000 Growth ETF (IWF - Free Report)
IWF topped asset flow creation, gathering $6.8 billion in capital. It offers exposure to U.S. companies whose earnings are expected to grow at an above-average rate relative to the market by tracking the Russell 1000 Growth Index. It holds 498 stocks in its basket and charges 19 bps in annual fees. Information technology takes the largest share at 43.5% of portfolio while consumer discretionary, and communications round off the next two spots. The fund has amassed $74.6 billion shares and trades in an average daily volume of 1.2 million shares. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Growth ETFs Make a Comeback As Market Hits New Peak).
SPDR S&P 500 ETF Trust (SPY - Free Report)
This fund has accumulated $4.7 billion in capital, taking its total AUM to $366.5 billion. It tracks the S&P 500 Index and holds 505 stocks in its basket with information technology, healthcare, consumer discretionary, financials and communication services being the top five, with a double-digit allocation each. The ETF charges investors 9 bps in annual fees and trades in an average daily volume of 61.6 million shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares Russell Mid-Cap Growth ETF (IWP - Free Report)
With AUM of $17.8 billion, this ETF saw inflows of $2.3 billion. It offers exposure to mid-sized U.S. companies whose earnings are expected to grow at an above-average rate relative to the market by tracking the Russell MidCap Growth Index. It holds 390 securities in its basket with key holdings in information technology, healthcare, consumer discretionary and industrials. The product charges 24 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares Russell 2000 Value ETF (IWN - Free Report)
This ETF has accumulated around $1.9 billion in its asset base last week. It provides exposure to small-cap U.S. companies that are thought to be undervalued by the market relative to comparable companies. It holds 1,388 stocks in its basket and is skewed toward the financials sector which holds 25.6% of the assets. Industrials, healthcare and real estate round off the next three spots. IWN has $19 billion and an average daily volume of 1.5 million shares. It charges investors 24 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Value Investing Wins in 1H: 7 Best-Performing ETFs).
iShares Russell 1000 Value ETF (IWD - Free Report)
This is the ultra-popular value ETF targeting large and mid-cap stocks with value characteristics. It follows the Russell 1000 Value Index, charging investors 19 bps in annual fees. It holds 841 stocks in its basket with financials, healthcare, industrials and information technology taking double-digit exposure each. The fund has gathered around $1.6 billion in capital, taking its total AUM to $55 billion. It trades in an average daily volume of 2.5 million shares and has a Zacks ETF Rank #1 with a Medium risk outlook.
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 >>