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December ETF Asset Flow: S&P 500 Gains; Gold Loses

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As we welcome the year 2017, it is time to look back at the ETF asset flow report for December 2016 – the month which saw major events like the sole Fed rate hike of the year, a Santa Claus rally and definitely the continuation of the Trump-induced bullishness on the bourses. Let’s take a look at the corners that were the hot favorites of investors and those that were cast out. The data is as per till December 28, 2016 (read: 4 Under-the-Radar ETFs Soaring High After Trump Win).


S&P 500 – SPDR S&P 500 ETF SPY

U.S. economic recovery and the return of risk-on sentiments post Donald Trump’s win, put the S&P 500 on investors’ radar. Trump’s pledges for fiscal reflation and deregulation led SPY to grab about $12.8 billion in assets. iShares Core S&P 500 IVV and Vanguard 500 ETF VOO hauled in about $2.91 billion and $1.20 billion in the month, respectively.

Developed Market – Vanguard FTSE Developed Markets ETF (VEA - Free Report)

The developed market showed signs of strength lately. Plus, several developed markets including the Euro zone and Japan are still enjoying the ultra-easy monetary policy and are thus poised to benefit. VEA attracted about $2.04 billion in the month (read: 5 Market Beating Broad International ETFs of 2016).

Senior Loan – PowerShares Senior Loan ETF BKLN

The senior loans are floating rate instruments that pay a spread over the benchmark rate like LIBOR, thereby eliminating interest rate risk. As treasury bond yields were high following Trump’s victory and the Fed rate hike, senior loan ETFs like BKLN amassed about $1.31 billion in assets (read: 6 Bond ETFs to Play Higher Rates).


Gold – SPDR Gold Trust GLD

Gold saw a rough stretch in December, having lost about $2.24 billion in assets. Chances of a rebound in gold in 2017 are slim. Investors should note that increased inflationary expectations and a Fed rate hike boosted U.S. Treasury bond yields rapidly post Trump win, which in turn, marred the appeal for the non-interest bearing asset gold (read: More Pain or Relief Ahead for Gold ETFs in 2017?).

Minimum Volatility – iShares MSCI EAFE Minimum Volatility ETF EFAV

Thanks to extreme bullishness in the market, minimum volatility ETFs fell out of favor among investors. EFAV saw about $822.2 million in assets gushing out while iShares Edge MSCI Min Vol USA USMV shed about $503.9 million in the month.

Oil – United States Oil USO

Sentiments are still rocky in the oil patch. While on the one hand, things are looking up on the OPEC output cut deal, occasional solid U.S. crude inventory built-up give cues of anxiety in the oil patch. In fact, the prospect of increased shale oil production and a stronger greenback, which can hurt oil prices in 2017, probably kept investors away from USO. The fund saw about $709.4 million of asset depletion.

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