The month of August went well with Wall Street mainly on abating trade tensions following the U.S.-Mexico trade deal and solid corporate earnings. The S&P 500 and the Nasdaq Composite hit the 2,900 and 8,000 mark, respectively, for the first time in late August (read: U.S.-Mexico Trade Deal to Revamp NAFTA: ETF Winners).
This helped the ETF industry to see about $10 billion of inflows in the final week of August, sending year-to-date inflows up to $172.9 billion (as of Aug 30, 2018), per etf.com. Let’s delve a little deeper and see which ETF areas hauled in maximum assets in the month and which ones lost the most.
U.S. Equities Top
Since the S&P 500 and the Nasdaq Composite reached a record high in the month, Invesco QQQ Trust (QQQ - Free Report) topped the list with about $3.51 billion of monthly inflows. Apart from the Nasdaq-based ETF, S&P 500-orineted ETFs garnered assets well. iShares Core S&P 500 ETF (IVV - Free Report) and Vanguard S&P 500 ETF (VOO - Free Report) took the second and third spots with about $3.26 billion and $1.93 billion inflows, respectively.
A key finding was the revival of the small-cap segment in August with iShares Core S&P Small Cap ETF (IJR - Free Report) adding about $725.7 million in the month. Small-cap stocks are likely to do better in a rising rate environment (which currently the case is) since these are tied more to domestic activities and are thus not hurt by a rising dollar. Economic well-being in the home turf is also a major positive for small-cap stocks (read: Small-Caps Rule in August: Top-Performing ETFs).
High-Yield Bonds Sizzle
iShares iBoxx USD High Yield Corporate Bond ETF (HYG - Free Report) , which yields about 2.08% annually, attracted about $1.49 billion in assets. As rising rate risk concerns were prevalent, investors probably poured money into products that offer benchmark-beating yields.
Emerging Markets in Favor Despite Tensions
Investors showered their love on emerging markets in August despite economic trouble in Turkey and Argentina, which badly hit their currencies and sent shockwaves in the broader emerging markets. Despite a rising dollar, investors poured about $1.50 billion money into iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) .
Consumer Discretionary Held Head High
The back-to-school season, the shopping extravaganza between July and September, is probably one of the reasons for Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) adding more than $1.17 billion in assets in the month (read: 2 ETF & Stock Takeaways From Back-to-School Shopping Season).
Gold Loses Glitter
Due to rising rate concerns, SPDR Gold Shares (GLD - Free Report) lost about 1.2% in the month. Plus, the market movement was pro-risk, which marred the appeal for this safe-haven asset. The fund lost about $1.63 billion in assets in the month.
Dividend Fund Shades Assets
Rising rate concerns probably took a toll on the dividend ETF SPDR S&P Dividend ETF (SDY - Free Report) , which saw about $1.17 billion in assets gushing out.
Brazil Falls Out of Investors’ Favor
Brazil's economy recorded much slower growth in the second quarter due to a trucker strike and electoral uncertainty.There was an opinion poll conducted by XP Investimentos on voter views ahead of this October's presidential election. The poll showed leftist Fernando Haddad having an upper hand over right-wing frontrunner Jair Bolsonaro, while market-friendly centrist Geraldo Alckmin holding the third place, per Reuters. This acted against the fund.iShares MSCI Brazil ETF (EWZ - Free Report) lost about $711 million in assets.
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