Last week saw increased geopolitical risks, when Trump threatened to ban trade with North Korean partners, and formation of Hurricane Irma, which hit Florida in the weekend, spread ripples of fear. Positive news, including a debt ceiling extension and temporary government funding, also made rounds and renewed confidence in the stock market (read: ETFs to Lose If Trump Bans Trade With North Korean Partners).
Against such a backdrop, ETFs overall gathered about $8.9 billion capital last week, bringing year-to-date inflows to $312 billion. U.S. fixed income ETFs led the way with $2.6 billion inflows, closely followed by $2.5 billion in U.S. equity ETFs and $1.7 billion in international equity ETFs, as per etf.com.
Love for Treasury ETFs
Treasury ETFs were in the spotlight as growing Washington turmoil, North Korea tensions and muted inflation took investors to safety. The Fed’s dovish comments also gave a boost to the bond markets, especially long-term Treasuries. As such, iShares 20+ Year Treasury Bond ETF (TLT - Free Report) gathered $919 million last week, propelling the fund’s asset base to $8.4 billion. It tracks the ICE U.S. Treasury 20+ Year Bond Index, holding 33 securities in its basket. The fund has an average maturity of 26.06 years and effective duration of 17.74 years. It charges 15 bps in fees per year and added 1.8% last week. The fund has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Defensive ETFs to Tackle Weak Job Data, North Korea Tensions).
Another Treasury fund — iShares 3-7 Year Treasury Bond ETF (IEI - Free Report) — with an asset base of around $7.7 billion, has pulled in about $261.6 million in capital. It provides exposure to intermediate-term U.S. Treasury bonds with average maturity of 4.78 years and effective duration of 4.50 years. The fund charges 15 bps in annual fees and gained 0.5% last week. It has a Zacks ETF Rank #3 with a Medium risk outlook.
Gold ETFs Rocks
Gold is often viewed as a store of value and hedge against market turmoil. As a result, products tracking this bullion like SPDR Gold Trust ETF (GLD - Free Report) saw inflows of $872.9 million. This fund tracks the price of gold bullion measured in U.S. dollars, and kept in London under the custody of HSBC Bank USA. It is an ultra-popular gold ETF with AUM of $36 billion and charges 40 bps in fees per year from investors. The ETF was up 1.5% last week and has a Zacks ETF Rank #3 with a Medium risk outlook (read: North Korea's Nuclear Test Drives Safe Haven ETFs Higher).
A Few U.S. Equity ETFs Gained Traction
The ultra-popular iShares Russell 2000 (IWM - Free Report) was the top asset gainer, having accumulated nearly $1.1 billion. This took the fund’s total AUM to $37.7 billion. The product tracks the Russell 2000 Index with none holding more than 0.46% of assets. Information technology, financials, health care, industrials and consumer discretionary are the top five sectors. Expense ratio comes in at 0.20%. It lost 0.9% last week and has a Zacks ETF Rank #3 with a Medium risk outlook.
While the ultra-popular SPDR S&P 500 (SPY - Free Report) was the most hated ETF last week with massive outflows of $1.4 billion, a few large cap ETFs managed to attract investors’ attention in spite of so many hurdles. iShares Core S&P 500 ETF (IVV - Free Report) was the fourth asset gainer in this category, having accumulated $880.7 million. This took the fund’s total AUM to $125 billion. The ETF tracks the S&P 500 index with none accounting for no more than 0.5% of assets. The fund is also widely spread across a number of sectors. It is the low cost choice in the space, charging only 20 bps in fees per year and lost 0.5% last week. The product has a Zacks ETF Rank #2 with a Medium risk outlook (read: S&P 500 ETFs Face Off: SPY Versus IVV).
Vanguard Total Stock Market ETF (VTI - Free Report) , which provides broad exposure to the U.S. equity market with diversification benefits across a number of sectors, market cap and securities, accumulated $368 million last week. The ETF shed 0.6% in the same time frame.
Currency Hedged ETFs Lag
Currency hedging strategies have taken a back seat owing to weakness in the dollar. This is especially true as iShares Currency Hedged MSCI EAFE ETF (HEFA - Free Report) pulled out nearly $137 million from its AUM. This fund targets the developed international stock market with no currency risk and tracks the MSCI EAFE 100% Hedged to USD Index. The fund charges 36 bps in fees per year from investors and lost 0.8% last week. It has a Zacks ETF Rank #3 with a Medium risk outlook.
Deutsche X-trackers MSCI Japan Hedged Equity (DBJP - Free Report) targets the Japanese equity market while mitigating exposure to fluctuations between the value of the U.S. dollar and Japanese yen. It tracks the MSCI Japan US Dollar Hedged Index, charging investors 0.45% in annual fees. The fund has AUM of $1.6 billion and lost 1.4% last week. It has a Zacks ETF Rank #3 with a Medium risk outlook.
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