Not All ETFs Are Alike

There's no getting around the fact that assets under management for exchanged-traded products are growing. The nearly 1,460 U.S.-listed ETFs and ETNs had over $1.2 trillion in combined AUM at the end of April, according to data from the ETF Industry Association. That's up from $1.1 trillion a year earlier and $846.7 billion in April 2010.

Selling On The Fall
Impressive growth to be sure, but not all ETFs are getting in on the action. In fact, some ETFs have seen rapid redemptions in the past year. Not surprisingly, some of the worst offenders in terms of redemptions are those whose performance has been less than stellar. That stands to reason as ETF redemption is akin to selling a stock. When lots of redemptions occur in a single ETF, it's equivalent to sellers outnumbering buyers in individual stocks. The result is the ETF's price comes down.
 
Along those lines, fund-flows data can be instructive, though the caveat is not always 100% accurate. For example, the Market Vectors Gold Miners ETF (NYSE: GDX) ranks among the top-10 ETFs for share creations over the past year. In that time, GDX has lost 21.3%.
 
When it comes to those funds seeing big redemptions since May 2011, almost all are in the red. Take a look at a few of the culprits.
 
Market Vectors Coal Miners ETF (NYSE: KOL) Investors apparently got the memo that low natural-gas prices coupled with slowing Chinese and Indian economies would not be good for KOL and its constituents. That much is highlighted by the ETF's 38.5% slide in the past year plus the fact that KOL currently rests less than $2 above its 52-week. KOL will start today with $180.4 million in AUM. In early May 2011, that number was over $581 million.
 
iShares MSCI Brazil Index Fund (NYSE: EWZ) EWZ and its Brazil ETF brethren have had their share of problems recently. Still, EWZ was the third-largest emerging markets ETF overall and the largest, country-specific fund (excluding funds tracking the S&P 500) at the end of April.
 
That meant EWZ had almost $8.6 billion under management, which has since fallen to $8 billion. At the end of April 2011, EWZ had more than $13 billion in AUM. That puts EWZ down 20% in the past year.

iShares MSCI Japan Index Fund (NYSE: EWJ) There might yet prove to be value in Japanese equities. Then again, some folks have been saying that for years as the bull case has yet to materialize. We know this much: EWJ is trading lower than it was in the days immediately following last year's tsunami. EWJ is down 8.4% since May 2011, but its AUM has slid much worse on a percentage basis. At the end of April 2011, EWJ had $7.5 billion in assets. As of May 10, that number was less than $5.3 billion.
 
iShares Silver Trust (NYSE: SLV) Less than 13 months ago SLV was flirting with $47a share. Maybe it was manipulation in the silver market, or perhaps, increased margin requirements, or a combination of both that led to silver's 2011 demise. Whatever the reason, SLV had $17.2 billion in AUM at the end of April 2011. One year later, it had less than $9 billion (as of May 10). When you see So it's not surprising the fund is down 18% in the past year when you see that type of AUM decline. Perhaps we should ask why it's not down even more.
 
Energy Select Sector SPDR (NYSE: XLE) With the recent plunge in West Texas Intermediate, NYMEX-oil futures have turned negative on the year. Oddly enough, in the past three months, equity-based XLE has performed almost twice as bad as the futures-based U.S. Oil Fund (NYSE: USO).
 
Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) account for 34% of XLE's weight. That may or may not be a reason for XLE's AUM tumble, but tumble it has. From April 30, 2011 to April 30, 2012, XLE saw its AUM haul dwindle to $7.7 billion from $10.4 billion. Another $1.1 billion has been pulled from the fund since the start of May.

An interesting phenomenon and one that underscores the notion investors aren't satisfied with integrated-oil stocks.