1H ETF Asset Report: Gold Glows; Equities Fade

After a tumultuous 1H which met the monumental event (or disaster!) like Brexit in the final month, it might be wise to look at how the $2.24 billion ETF industry performed in the period.

This is especially true given the talks that Brexit erased about $3 trillion from global markets in the next two-days sell-off following Brexit. Almost the entire world got busy in predicting recessionary threats for the U.K. economy if it cut ties with the EU and the event’s negative repercussions on the global economy (read: Top ETF Stories of the First Half of 2016).

In any case, the start of 1H was also rocky with 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. While things started to improve from Q2, Brexit fears started spooking investors from the start of June.

Let’s see how such upheavals in the first half of 2016 impacted asset growth in the ETF industry (data as per etf.com and as of June 29, 2016):

Winners

Gold Gleams on Dovish Fed & Flight to Safety

A flight to safety following a spike in volatility at the start and end of 1H16 brightened the appeal for the safe-haven asset gold (despite the metal’s moderate fundamentals). Needless to say, despite only decent fundamentals, gold bullion ETFSPDR Gold Shares (NYSE:GLD) (LAGOS:GLD) added the highest assets worth about $12.2 billion in 1H (read: Should You Buy Gold and Bond ETFs after Brexit?).

Bond ETFs Garner Attention

Be it aggregate bonds, corporate bonds or TIPS bonds, fixed income products prevailed in 1H. The lure for regular current income in the aftermath of extremely low Treasury yield along with relative safety made this segment a winner.

iShares Core U.S. Aggregate Bond ETF (AX:AGG) hauled in $6.8 billion, while iShares iBoxx $ Investment Grade Corporate Bond ETF LQD gathered about $3.54 billion in assets. Due to the improved outlook on inflation, TIPS ETF iShares TIPS Bond ETF ( (HN:TIP) ) collected 2.85 billion in assets (read: Top Performing Bond ETFs of 1H).

Low Volatility: Investors’ Another Favorite

Since the timeframe was characterized by most-startling global events like Brexit, seesawing oil prices and Fed hike related anxiety, assets brimmed over with low-volatility products. With this market sentiment, iShares Edge MSCI Min Vol USA ETF USMV and iShares MSCI EAFE Minimum Volatility ETF EFAV pulled in about $6.13 billion and $2.79 billion assets, respectively (read: Low Volatility ETFs Still in Play).

Losers

U.S. Equities Fall Out of Favor

U.S. stocks could not rope in investors’ attention probably on slight cooling of the economy especially in Q1 and growth outlook cut by the Fed as well as a few analysts. Plus, earnings recession and global growth fears compounded the issues. As a result, SPDR S&P 500 ETF (NYSE:SPY) Trust (AX:SPY) lost the most, shedding about $11.7 billion in assets. However, another S&P-based ETF Vanguard S&P 500 Index Fund VOO somehow managed to gain investors’ favor and accumulated about $4.83 billion in assets.

SPY is not the only U.S.-based equity ETF that got hammered as PowerShares QQQ Trust QQQ also saw outflows of about $6.04 billion in the first half. General risk aversion and downbeat Q1 earnings from a few tech bellwethers led investors to turn their face away from this tech-laden ETF (read: Social Media ETF: Should You Connect After Dull Earnings?).

Of the other defeated U.S. equity ETFs, iShares Russell 2000 ETF IWM, Financial Select Sector SPDR Fund XLF, iShares Russell 1000 Growth ETF IWF and First Trust Health Care AlphaDEX Fund FXH redeemed assets heavily in the range of $2.86 to $2.05 billion.

While nagging concerns over the healthcare space regarding the over pricing of life-saving drugs pushed the hot healthcare sector down, low levels of interest rates, troubled investment banking activities and subdued fixed-income markets assaulted the financial sector (read: Earnings or Oil--What Will Drive Financial ETFs Ahead?).

Japan ETFs Lose Out

Japan equities ETFs includingWisdomTree Japan Hedged Equity Fund DXJ andiShares MSCI Japan ETF EWJ lost about $5.09 billion and $4.03 billion, respectively. Strength in the safe-haven asset yen wreaked havoc on Japan equities in the period, despite BoJ’s enactment of a negative interest rate.

Europe Falls Short too

The problem was the same with the currency hedged Europe equities ETF WisdomTree Europe Hedged Equity (HEDJ). The fund lost $4.99 billion in assets. Also, iShares MSCI Eurozone ETF EZU shed about $3.28 billion in assets in 1H16, definitely to reflect the immediate impact of Brexit.