The month of January was all about dovish Fed minutes, signs of development in the U.S.-China trade talks, an oil price rally and some reassuring earnings reports. While these factors heated up the global equity market despite winter chills, global growth worries did not stop haunting investors.
Against this backdrop, let’s see how the start to 2019 impacted asset growth in the ETF industry in the first month of the year (as of Jan 29) (per etf.com ):
Emerging Markets a Winner
Since the greenback remained subdued in January on dovish Fed minutes, scope for emerging market investments brightened. Plus, signs of improvement in the U.S.-China trade relation gave a boost to the segment. In fact, both the countries met to resolve trade issues at the end of January though chances of a far-reaching agreement are low.
iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) pulled in about $3.60 billion in assets in the month. iShares JP Morgan USD Emerging Markets Bond ETF (EMB - Free Report) also raked in around $1.31 billion in assets (read: EM Equities ETFs Off to a Great Start in 2019: Here's Why).
Low Volatility & Quality ETFs Prevail
The International Monetary Fund (IMF) forecasts global growth of 3.5% for this year and 3.6% for the next. The forecast dropped 0.2 percentage points and 0.1 percentage point from the October report (read: IMF Cuts Global Growth Outlook: Bet on 5 Quality ETFs).
Since global growth worries remained alive and kicking even amid strong market conditions, investors injected about $1.74 billion in iShares Edge MSCI U.S.A. Quality Factor ETF (QUAL) assets. iShares Edge MSCI Min Vol U.S.A. ETF (USMV - Free Report) amassed about $1.26 billion in assets in January.
Corporate Bonds Stayed Strong
Vanguard Short-Term Corporate Bond ETF (VCSH - Free Report) and Vanguard Intermediate-Term Corporate Bond ETF (VCIT - Free Report) have hauled in about $2.92 million and $2.48 million in assets, respectively. Both funds yield 2.63% and 3.55% annually.
Dovish Fed minutes kept the rise in bond yields in check. Probably this is why investors parked their money in investment-grade corporate bonds in quest of earning solid current income while keeping default risks low.
Safe Havens Rule
While subdued treasury yields attracted investors toward U.S. treasury ETFs like iShares 20+ Year Treasury Bond ETF (TLT - Free Report) ($1.38 billion in asset growth) and iShares 7-10 Year Treasury Bond ETF (IEF - Free Report) ($1.36 billion in asset growth), worries of trade and global growth uncertainty boosted the appeal for safe-haven metal SPDR Gold Trust (GLD - Free Report) .The fund added about $1.51 billion in assets (read: Four Solid Reasons to Buy Gold ETFs Now).
US Stocks Fall Out of Favor
The U.S. economy was under partial government shutdown for most part of January, which has probably made investors skeptical about the future of U.S investments. The S&P 500-based ETFs like SPDR S&P 500 ETF Trust (SPY - Free Report) , iShares Core S&P 500 ETF (IVV - Free Report) ,iShares Russell 2000 ETF (IWM - Free Report) and Invesco QQQ Trust (QQQ - Free Report) have lost about $12.8 million, $6.9 million, $3.32 million and $1.20 million, respectively (read: ETF Winners & Losers in One-Month Long Government Shutdown).
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