Despite trade war and rising rate worries, the broader market remained steady in July, with the S&P 500-based ETF (SPY - Free Report) , Dow Jones-based ETF (DIA - Free Report) and Nasdaq 100-based (QQQ - Free Report) adding in the range of 1.3% to 4.2%. Still, the value quotient prevailed. Assets that are trading cheaper and offer safety appeared to have hauled in more money. Let’s delve a little deeper.
Value ETFs Grown
Vanguard Value ETF (VTV - Free Report) emerged the top performer, having hauled inabout $1.70 billion in assets.The value segment tends to remain relatively stable in an uncertain environment. Value funds offer exposure to a wide variety of stocks with value characteristics, such as low P/B, low P/S and low P/E ratios. Perhaps with trade war talks, changing monetary policies in major global central banks and geopolitical tensions, investors flocked to this value ETF.
Corporate Bonds Sizzle
Fixed income ETFs did well in July as the global market was under the grip of the U.S.-China trade tiff. iShares iBoxx USD High Yield Corporate Bond ETF (HYG - Free Report) , which yields about 5.11% annually, added about $1.57 billion in assets while iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD - Free Report) , which yields about 3.36% annually, raked in about $964.03 million in assets.
Investors have probably started counting on decent corporate earnings and an oil price rebound. Moreover, with a hawkish Fed around, investors perhaps tapped corporate bond ETFs, providing benchmark-beating yields.
Notably, bonds are safer than stocks as bondholders get paid off before equity investors if a company liquidates. So, investors probably found fixed-income securities as safer bets amid flaring trade tensions (read: Fearing a Market Slump? Take Flight to Corporate Bond ETFs).
Large-Caps Gain Too
A 4.1% uptick in U.S. GDP growth in Q2, upbeat corporate earnings and receding fear in the nagging five-month long trade talks brought large-caps under the spotlight. Plus, cheaper valuation worked well for large caps as these have been subdued this year on trade concerns. Schwab U.S. Large-Cap ETF (SCHX - Free Report) added about $1.07 billion in the month (read: Trade Fear Oversold? Large-Cap Growth ETFs at 52-Week High).
Health Care Sector Take Steady Strides
Solid Q2 earnings expectations, the defensive nature of the sector, rising M&A and a positive regulatory backdrop helped Health Care Select Sector SPDR Fund (XLV - Free Report) add about $954.9 million in the month. Also, positive drug trial results from the likes Biogen (BIIB) helped the sector as a whole (read: Healthcare ETFs to Buy on Solid Q2 Earnings Expectations).
Small-Cap ETF Sheds Assets
President Trump’s protectionist agenda and the resultant trade war fears weighed on large-cap stocks that have considerable international exposure. On the other hand, the domestically focused pint-sized stocks soared. But trade fear looks oversold now and the small caps appear to be guilty of overvaluation. Probably this is why, iShares Russell 2000 ETF (IWM - Free Report) lost about $1.45 billion in July.
Developed Foreign Markets on the Losers’ List
Developed international markets too fell flat in the month. iShares MSCI EAFE ETF (EFA - Free Report) , which tracks large and mid-cap representation across Developed Markets countries around the world, excluding the United States and Canada,lost about $1.25 billion in assets.
Gold Had No Glitter
Gold lost all its shine, plunging to a one-year low in July. An improving U.S. economy, a hawkish Fed and a stronger greenback led to this. Naturally, investors lost faith in this precious metal and SPDR Gold Trust (GLD - Free Report) saw about $751.3 million assets gushing out (read: Gold Slips Into Correction Territory: How to Trade with ETFs).
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