Back to top

Image: Bigstock

ETF Asset Report of August 2022: Bonds Win

Read MoreHide Full Article

Wall Street had a downbeat August, with the S&P 500 losing about 4.4% past month (as of Aug 31, 2022), the Dow Jones losing 3.6% and the Nasdaq Composite falling about 6.5%. The small-cap index Russell 2000 lost about 3.2%. Rising rate worries at the end of the month made investors jittery.

New York Fed President John Williams recently said he expects interest rates to continue moving higher and remain at those levels until inflation is controlled, as quoted on CNBC. Fed chief Powell too recently commented that taming U.S. inflation will cause "pain" for American families and businesses as rate hikes will continue.

Per CME group, there is a 70.5% probability of a 75-bp rate hike in the September meeting, while 29.5% probability of a 50-bp rate hike. In response to Fed rate hike bets, the two-year U.S. treasury yield jumped from 2.90% at the start of the month to 3.46% on Aug 30, 2022.

Among the key developments in the month, the important ones were cooling inflation. Inflation in the United States moderated slightly as energy and gasoline prices dropped. U.S. President Joe Biden has signed a $740 billion climate change, healthcare and tax ‘Inflation Reduction Act.’ The coming Democratic message will likely focus on the aspects of the bill that could improve Americans' lives immediately — including tax credits for electric vehicles and energy-efficient home improvements and key health care provisions.

Against this backdrop, below we highlight a few ETFs that fetched sizable assets in August of 2022.

Financials Win

Financial Select Sector SPDR Fund (XLF - Free Report) gained about $3.85 billion in assets despite the fact that yield curve flattened. While the Fed continued to hike rates resulting in a spike in the short-term rates, recessionary fears suppressed the long-term bond yields in the quarter.

S&P 500 & Total Stock Market Gain

Vanguard S&P 500 ETF (VOO - Free Report) and iShares Core S&P 500 ETF (IVV - Free Report) amassed about $3.62 billion and $2.31 billion in assets in August. Corrections in valuations probably led the S&P 500 to garner investors’ attention. Vanguard Total Stock Market ETF (VTI - Free Report) too fetched about $2.47 billion in assets.

U.S. Short-Term Bonds in Fashion

Vanguard Short-Term Corporate Bond ETF (VCSH - Free Report) added $2.56 billion in assets. The fund yields 1.97% and charges 4 bps in fees.  The underlying Bloomberg U.S. 1—5 Year Corporate Bond Index measures the investment return of U.S. dollar denominated, investment-grade, fixed rate, taxable securities issued by industrial, utility, and financial companies with maturities between 1 and 5 years.

Intermediate and Long-Term Treasuries Win

Vanguard Intermediate-Term Treasury Index ETF (VGIT - Free Report) and iShares 7-10 Year Treasury Bond ETF (IEF - Free Report) fetched in about $2.22 billion and $2.44 billion in assets, respectively. Bond investing, overall, ruled in August. Long-term U.S. treasury bond ETF iShares 20+ Year Treasury Bond ETF (TLT - Free Report) too added about $2.17 billion in assets. Vanguard Total Bond Market ETF (BND - Free Report) and iShares Core U.S. Aggregate Bond ETF (AGG) hauled in about $2.59 billion and $1.46 billion in assets in the month, respectively.

Gold Loses Its Glitter

SPDR Gold Trust (GLD - Free Report) added about $1.82 billion in assets. As the price of the greenback gained considerable strength in August, gold prices fell. Gold shares an inverse relationship with the greenback.

Dividends Out of Fashion

SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) andSPDR S&P Dividend ETF (SDY - Free Report) too lost about$1.46 billion and $1.17 billion in assets, respectively.

Published in