ETF Asset Report For April 2017

The month of April was mixed with earnings showing promise but subdued economic reading and a political gridlock coming in the way of Wall Street’s rally. However, the global market (especially Europe) seemed to be relatively steady on the much-wanted outcome of some key elections and referendums (read: 5 European ETFs Soaring on French Election Results).

Chances of the extension of the OPEC output cut deal is still anything but sure. Against this backdrop, let’s find out the top gainers and losers in terms of asset growth in April (as of April 27, 2017) (source: etf.com).

U.S. Equities ETFs: The Bright Corner

The S&P 500 was on radar as investors flocked to iShares Core S&P 500 ETF IVV and Vanguard S&P 500 Index Fund VOO. The funds IVV and VOO garnered respectively about $6.34 billion and $1.40 billion in assets in the month. This was a confirmation of solid investor confidence in U.S. equities (read: BlackRock's AUM at Record $5.4 Trillion: ETFs in Focus).

However, SPDR S&P 500 ETF Trust (AX:SPY) lost about $5.85 billion of assets in April probably due to higher expense ratios compared with the other two for the same themed product. Notably, IVV charges 4 bps, VOO 5 bps while SPY (NYSE:SPY) charges 9 bps in fees.

Small-cap U.S. ETF iShares Russell 2000 ETF IWM also gathered about $1.61 billion. Trump’s proposed tax cuts and solid earnings perhaps favored U.S. stocks.

Developed International Markets No Laggard

Investors should note that development in international markets have also looked up lately. This must have propelled investors to hoard cash in foreign-themed ETFs. iShares Core MSCI EAFE ETF IEFA – which measures large, mid and small-capitalization developed market equities, barring the U.S. and Canada – fetched about $2.13 billion in the month. Vanguard FTSE Developed Markets ETF VEA, another developed market fund excluding the U.S., saw about $1.37 billion of inflows.

Emerging Markets: Another Sweet Spot

Though the U.S. market is still in decent shape, Trump trade has lost some of its steam as investors have started speculating whether tax reforms, fiscal stimulus and deregulation are already baked in the current valuation. This confusion has driven a sizable portion of investors’ money toward emerging markets.

Moreover, EM economies are a lot more protected from Fed’s tightening shocks this time than they were in 2013, which is remembered for the taper-tantrum. As a result, strong fundamentals have lately called for EM investing.

iShares Core MSCI Emerging Markets ETFIEMG and Vanguard FTSE Emerging Markets ETF VWO hauled in about $1.21 billion and $952.4 million in assets in April (read: Why Emerging Market ETFs Are Surging This Year).

Mid-Cap Out of Favor

Investors turned their face from mid-cap ETFs likeSPDR S&P Midcap 400 ETF Trust MDY and iShares S&P Mid-Cap 400 Value ETF IJJ. Both funds saw about $413.1 million and $294 million of asset outflows.

Financial ETFs: A Spoiler

Financial Select Sector SPDR ETF (NYSE:XLF) XLF shed about $495 million in assets as U.S. Treasury yields continued to decline in late April on downbeat U.S. economic data. Also, a dovish Fed rate hike outlook, geopolitical risks and moderate banking earnings probably weighed on investors' sentiment (read: What Do Banking Earnings Tell About These Financial ETFs?).

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