Significant Weekly ETF Inflows And Outflows

| March 20, 2013 | 0 Comments

inflows and outflowsUS stocks continued marching higher last week.  The Dow Jones Industrials set a new record high of 14,539.  And the S&P 500 came within two points of its October 2007 record high of 1,565.

Year-to-date, the Dow is up nearly 11% while the S&P 500 has gained more than 9%.

It should come as no surprise then that US stock exchange traded funds saw the heaviest inflows of any asset class last week.  In fact, investors plowed a whopping $9.9 billion into them. 

US fixed income ETFs were a distant second with net inflows of $1.4 billion.

All in all, investors funneled $11 billion into US listed ETFs last week.  The heavy buying brought total US ETF assets up to a mind-boggling $1.47 trillion. 

That’s a 1.5% increase over the prior week’s level.

Let’s take a closer look now at two particular ETFs.  One that saw the biggest percentage jump in net inflows last week and another which had the largest percentage increase in net outflows.

By analyzing percentage changes in net inflows and outflows, you can gain valuable insight into what investors are thinking.  This insight in turn can help you make decisions about where to invest new money and where to take money off the table.

Vanguard High Dividend Yield ETF (VYM)

VYM had net inflows of $1.1 billion last week.  And the heavy buying drove a stunning 21% increase in the fund’s assets under management. 

It was the biggest percentage increase in net assets for any US listed ETF.  VYM was clearly the most popular girl at the dance last week.

This activity indicates investors continue to scramble for yield.  With the Fed committed to ultra-low interest rates until at least mid-2015, dividend paying stocks are the best bet for generating income and minimizing interest rate risk.

VYM invests in stocks of companies that pay higher than average dividends.  The fund is large and liquid with over $6.3 billion in assets under management.  And it carries a very low expense ratio of just 0.13%.

Dividends are paid on a quarterly basis.  The current annual dividend rate is $1.59 per share.  And the fund’s yielding 2.93% right now.

VYM has gained over 10% so far this year.  And it has averaged 15.6% annually over the past three years.

iShares FTSE China 25 (FXI)

FXI saw $515 million walk out the door last week.  As a result, the fund’s assets under management fell to $7.1 billion.  That’s a hefty one-week decline of 6.8%.

In fact, it was the largest percentage decrease in net assets of any US listed ETF last week.

FXI invests primarily in stocks included in the FTSE China 25 index.  This index is designed to track the performance of the largest companies in China’s stock market that are available to international investors.

Investors have been exiting FXI since it failed to break through resistance at its 52-week high of $41.97 in early February.  And the selling has gathered momentum as the Chinese government imposed new measures to cool off China’s red hot real estate market.

Some investors are now concerned China is entering a period of slowing growth and tightening monetary policy.

FXI is now down 10.2% for the year.  And it has lost 6.8% over the past three years.  However, the fund does offer a dividend yield of 2.55%.

Profitably Yours,

Robert Morris

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Category: ETFs

About the Author ()

Wall Street veteran and ETF specialist Robert Morris helped created ETF Trading Research in order to help investors get the most out of their ETF investments. Before creating ETR, Robert worked for a number of prestigious Wall Street firms such as Salomon Smith Barney, UBS, Hyperion Financial and Charles Schwab.

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