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November ETF Asset Report: U.S. Tops, Treasuries Flop

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Given how important November was with progress on tax reform, Powell’s selection as the next Fed chair and the OPEC output cut deal extension, it will be interesting to look back at how ETF investors behaved in the month. Overall, the month mostly witnessed positive events.

The Trump rally for the most part of the month on hopes of fiscal reflation and solid retail sales during the Black Friday weekend can be credited to equity gains. Solid U.S. economic growth momentum and an OPEC output curb deal also deserve credit.

Against this backdrop, let’s take a look at the corners that were the hot favorites of investors and those that were cast out.

U.S. Market Rally Continues

Trump trade and increased consumer confidence were palpable in November. Both the House and the Senate moved forward with the tax reform agenda, propelling the broader market higher. Plus, U.S. consumer confidence jumped to a 17-year high in November, signaling upbeat sentiments surrounding the economy and labor market, per Bloomberg. All these resulted in a solid start to holiday buying.

 iShares Core S&P 500 ETF IVV and Vanguard S&P 500 ETF VOO garnered about $2.3 billion and $1.56 billion in the month. iShares Edge MSCI USA Momentum Factor ETF MTUM, iShares Edge MSCI Min Vol USA ETF USMV and Vanguard Total Stock Market ETF VTI grossed about $1.17 billion, $1.25 billion and $944.8 million in assets in the month of November.

Financials Fueled Up

Financials had a nice month thanks to Fed chair pick Powell. Since Powell is a supporter of deregulations in the banking sector, his testimony in the month favored financial stocks. A rising rate environment on increased inflationary expectations and bets on faster monetary policy tightening acted as the wind beneath the wings. As a result, Financial Select Sector SPDR ETF XLF hauled in $1.1 billion in assets in the month of November (read: Powell to Lead Fed: Best ETF Strategies).

Technology in Favor

Though we noticed a crash in tech stocks at the end of the month (probably due to overvaluation concerns), the upbeat fundamentals lying under the space led investors to pour money into the tech fund.  First Trust Technology AlphaDEX Fund (FXL) added $938.9 million in assets (read: Tech ETFs & Stocks Tumble: Is it a Solid Entry Point?).

Treasuries Fall Flat

The case for a rate hike in December looks almost certain. The labor market has been steady lately and the overall economy is on the mend. The tax reform agenda is also crawling toward reality. As of Nov 30, 2017, the yield on the 10-year benchmark Treasury was 2.42%, 10 bps higher than what we saw on Nov 27, 2017.

Needless to say, such a trend weighed on treasury ETFs like iShares 20+ Year Treasury Bond ETF TLT and iShares 3-7 Year Treasury Bond ETF IEI. Those funds shed about $1.29 billion and $455 million in assets.

Utility Loses

Against a rising rate backdrop, high dividend-paying sectors including utilities are appear to be at risk, given their sensitivity to changes in interest rates. First Trust Utilities AlphaDEX Fund FXU lost about $851.7 million in assets in the month (read: Rate Hike in the Cards? Discard These Sector ETFs).

Gold Lost Its Glitter  

With safe-havens losing their appeal and rising rate prospects lingering, gold fell out of investors’ favor. SPDR Gold Trust (GLD - Free Report) shed about $450.2 million in assets (read: Safe Haven ETFs in Focus Amid Geopolitical Threats).

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