January ETF Asset Report: Safe Havens Rule

By | February 2, 2016

Scalper1 News

The month of January was all about heightened global growth concerns and deflation fears. In particular, the acute plunge in oil prices has taken a toll on a number of assets worldwide. Most economies across the world, be it China, Japan, the Eurozone or the otherwise improving U.S. economy, fears of a slowdown were prevalent. Sell-off was the keyword in January, sending most of the key global benchmarks in red. Central bank meetings came out dovish with more support promised for the future, if need be. The circumstance left investors pondering about where to invest their money and realize gains. Let’s see how this horrid start to 2016 impacted asset growth in the ETF industry. U.S. Treasury Bonds: Safe Retreat U.S. Treasuries across the yield spectrum gathered assets in January with the iShares Short Treasury Bond ETF (NYSEARCA: SHV ) being the topper. The fund attracted 2.69 billion of assets in the month. The iShares 20+ Year Treasury Bond ETF (NYSEARCA: TLT ) , iShares 7-10 Year Treasury Bond ETF (NYSEARCA: IEF ) and iShares 1-3 Year Treasury Bond ETF (NYSEARCA: SHY ) took third, fourth and fifth spots, hauling in around $1.67 billion, $1.36 billion and $1.18 billion in assets, respectively. Heightened global uncertainty brought this safe asset into the limelight. Dimming prospects of the frequent Fed rate hikes further, global growth worries and severely low oil price put a lid on global inflation and helped treasury valuation to soar. Gold Gets Shine Back Another safe refuge, gold, also dazzled in the month as it is often viewed as a safe haven asset to protect against financial risks, and has performed well lately (despite deteriorating fundamentals) on heightened market volatility. As a result, funds tracking the yellow metal, such as the SPDR Gold Trust ETF (NYSEARCA: GLD ), pulled in $959.2 million in assets in January. U.S. Equities Losing Out As most risky assets lost appeal in the month, investors fled the U.S. equities space. This is truer given the slowing U.S. growth momentum. Notably, the U.S. economy expanded at an annualized rate of 0.7% in the final quarter of 2015, down from the 2% growth registered in the third quarter. The Wall Street in fact went back to the 2014 levels last month. As a result, the U.S. broad equity ETFs saw huge outflows last month with the ultra-popular large-cap U.S. ETF, the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ), topping the losers’ list. The fund lost around $2.22 billion in assets. Not only SPY, but also the NASDAQ-based PowerShares QQQ Trust ETF (NASDAQ: QQQ ) came second, seeing $2.14 billion of assets gushing out. Other U.S. equity ETFs including the iShares Russell 1000 Value ETF (NYSEARCA: IWD ) and the iShares Russell 1000 Growth ETF (NYSEARCA: IWF ) also saw outflows of $1.35 billion and $1.28 billion in assets, respectively. Currency Hedged-Equities ETFs: Surprise Loser Though the prospect of further policy easing by the Bank of Japan (BoJ) was ripe in January, currency-hedged Japan ETFs fell out of investors’ favor. Probably, this was because of the fact that the greenback lagged in January (despite the December Fed liftoff) till BoJ announced a negative interest rate at the end of the month. Till January 28, 2016, the U.S. dollar fund, the PowerShares DB US Dollar Bullish ETF (NYSEARCA: UUP ) , lost 0.4% in the month while yen ETF, the CurrencyShares Japanese Yen Trust ETF (NYSEARCA: FXY ) , added about 0.5% during the same time frame. This sort of movement in currencies must have dented the currency-hedged Japanese equities ETFs like the WisdomTree Japan Hedged Equity ETF (NYSEARCA: DXJ ) which has seen assets worth $989.8 million flowing out. The problem was the same with the currency-hedged Europe equities ETF, the WisdomTree Europe Hedged Equity ETF (NYSEARCA: HEDJ ) . The fund lost $810 million in assets. Notably, euro also strengthened in the month as evident by the 1% gain in the CurrencyShares Euro Trust ETF (NYSEARCA: FXE ) till January 28, 2016. Original post Scalper1 News

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