ETF inflows surge as assets under management reach all-time high

Feb 7th, 2012 | By | Category: Equities
ETF inflows surge as asset under management reach all time high

Invesco’s flagship ETF, the PowerShares QQQ, gathered almost $4 billion as investors backed the tech-heavy Nasdaq.

A new year marks the redeployment of capital and a high water mark for US ETF AUM

US ETFs collected assets of $28.5 billion in January to mark the industry’s second-largest monthly inflow in three years and the eighth consecutive month of inflows, according to data released by Morningstar.

Every asset class but alternatives had inflows, and the outflows for alternative ETFs were minor. Total assets under management for US ETFs reached an all-time high of $1.15 trillion.

Below are some additional highlights about ETF asset flows in January:

US-stock ETFs claimed the largest inflow among the broad asset classes. These offerings took in $13.4 billion, and, in a show of strong risk-on sentiment, heavily targeted the financial and industrial sectors. PowerShares QQQ had greater inflows than any other ETF in January, collecting $3.8 billion in new assets.

SPDR S&P 500 SPY, with redemptions of $1.0 billion, topped the list of ETFs with the greatest outflows in January. However, the tendency for professional investors to use SPY as a liquidity management tool to avoid cash drag means the outflows for the ETF are not necessarily indicative of investor sentiment.

Investors’ appetite for risk was not unique to the equity space, as high-yield bond ETFs saw record inflows in January. iShares iBoxx $ High Yield Corporate Bond HYG and SPDR Barclays Capital High Yield Bond JNK collected $2.2 billion and $1.5 billion, respectively.

SPDR Gold Trust GLD, with inflows of $922 million, and iShares Gold Trust IAU, with inflows of $276 million, together accounted for more than 80% of inflows to the commodities asset class in January.

International-stock offerings took in a hefty $6.2 billion in January, with a significant portion of those assets going to emerging-markets offerings.

At the other end of the spectrum, sectors such as consumer staples and utilities, traditionally looked to as bastions of stability, were shunned in January.

The Consumer Staples Select Sector SPDR XLP and the Utilities Select Sector SPDR XLU, which both maintain volatility metrics far below the S&P 500, gave up $989 million and $617 million last month, respectively. Flows to these sectors have steadily broken down over the past five months, while over the same timeframe flows to the riskier financials and industrials sectors have become increasingly positive.

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