The third quarter of 2019 was all about the ebb and flow of trade tensions, global monetary policy easing and Trump’s impeachment talks. While markets were volatile on a flare-up in trade relations with China, widespread global monetary policy easing helped the broader market to a large extent.
Overall, the S&P 500 lost about 0.1% in Q3, the Dow Jones added about 0.4% and the Nasdaq Composite lost 1.9%. All-world ETF iShares MSCI ACWI ETF (ACWI - Free Report) retreated 1.2% in the third quarter.
Let’s see how investors reacted to this situation and parked their money in the third quarter. The data is from etf.com (as of Sep 30, 2019).
S&P 500 Win
Despite subdued performance of the S&P 500,iShares Core S&P 500 ETF (IVV - Free Report) and Vanguard S&P 500 ETF (VOO - Free Report) garnered about $8.01 billion and $4.16 billion in assets in the third quarter. SPDR S&P 500 ETF Trust SPY raked in about $2.85 billion in assets.
Gold bullion ETF SPDR Gold Trust (GLD - Free Report) raked in about $6.05 billion in assets.Gold prices have been on a tear of late, with GLD rallying 8% in the third quarter (as of Sep 27, 2019) against the S&P 500’s 0.1% loss. Heightened tensions related to the U.S.-China trade war in recent months led to the upside. Also, a barrage of rate cuts, Brexit uncertainty and the upcoming U.S. presidential election have played a crucial role in boosting the yellow metal (read: 5 Reasons to Buy Gold ETFs as Price May Touch $2000).
Low Volatility Prevails
The U.S. market was subdued, taking the spotlight away from low-volatility products. These apparently safe products, which normally do not surge in a bull market but offer protection in troubled times, were much in demand in the third quarter. Geopolitical tensions in the Middle East, tariff worries, overvaluation worries — all have contributed to investors’ interest in low-volatility products. iShares Edge MSCI Min Vol U.S.A. ETF (USMV - Free Report) has attracted about $5.27 billion in assets in the third quarter.
International Bonds Rule
As several international economies cut rates in the third quarter, bond yields fell and international bond fund Vanguard Total International Bond ETF (BNDX - Free Report) hauled in about $4.18 billion in assets. In fact, the Fed enacted two rate cuts in the third quarter, which dragged down the treasury bond yields and pushed investors toward Vanguard Total Bond Market ETF (BND - Free Report) . The fund hauled in about $3.21 billion in assets.
Sheen for Small-Caps Rekindle
Small caps, which have been under pressure, were on investors’ favor. Small-cap ETF iShares Russell 2000 ETF (IWM - Free Report) accumulated about $2.70 billion in assets in the quarter. A dovish Fed, trade war tensions, global growth worries, geopolitical risks, compelling valuation and a decently growing U.S. economy have probably worked in favor of pint-sized stocks.
Emerging Market ETFs Lost
Trade tensions dealt a blow to the emerging market bloc.iShares MSCI Emerging Markets ETF (EEM - Free Report) and iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) lost about $5.7 billion and $2.44 billion in the quarter (read: ETF Asset Report of September).
Financial Stocks Shed Assets
Financial Select Sector SPDR Fund (XLF - Free Report) lost about $1.80 billion in assets in the quarter due to low-yield environment (read: Guide to 10 Most-Heavily Traded ETFs).
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