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ETF Asset Report : Developed Markets Rule in Q2

The second quarter of Q2 was an eventful one and did not spare even the President of the United States from allegations related to his Russia links. A Fed rate hike, extension of the OPEC output cut deal and election in Europe were the other notable occurrences. Overall, global markets were steady in this time frame barring occasional hiccups (read: Trump Slump to Oil Slide: Top ETF Stories of First-Half 2017).

All the events left their mark on the quarterly ETF asset accumulation and redemption process. Let’s take a look at the corners that were the hot favorites of investors in the second quarter and those that were cast out. The data is as per till June 28, 2017 (read: Global ETFs Gather $4 Trillion AUM: What's Behind the Boom?).

S&P 500 ETFs Continue Gaining

The S&P 500 was on radar as investors continued to flock to iShares Core S&P 500 ETF IVV and Vanguard S&P 500 Index Fund VOO in Q2, after pouring billions in Q1. The funds IVV and VOO garnered respectively about $10.7 billion and $4.45 billion in the quarter (read: BlackRock's AUM at Record $5.4 Trillion: ETFs in Focus).

However, SPDR S&P 500 ETF Trust SPY lost about $9.6 billion of assets in Q2 probably due to higher expense ratios compared with the other two same-themed products.  Notably, IVV charges 4 bps, VOO charges 5 bps while SPY charges 9 bps in fees.

Developed International Markets Real Stars

Investors should note that development in international markets have also looked up lately. This must have propelled investors to store cash in foreign-themed ETFs. iShares MSCI EAFE ETF EFA and iShares Core MSCI EAFE ETF IEFA that measure large, mid and small-capitalization developed market equities, barring the U.S. and Canada, fetched about $6.23 billion and $5.52 billion, respectively, in the quarter. Vanguard FTSE Developed Markets ETF VEA, another developed market fund excluding the U.S., saw about $4.67 billion of inflows.

Emerging Markets & Europe Follow the Leaders

Though the U.S. market is still in decent shape, Trump trade has lost some of its steam on policy uncertainty. This confusion has driven a sizable portion of investors’ money toward emerging markets and Europe where economies are on an uptrend. Ebbing political upheaval in Europe was another positive.

iShares Core MSCI Emerging Markets ETFIEMG and Vanguard FTSE Emerging Markets ETF VWO hauled in about $4.36 billion and $3.15 billion in assets in the second quarter (read: Why Emerging Market ETFs Are Surging This Year).

On the other hand, Europe ETFs including Vanguard FTSE Europe ETF VGK and iShares MSCI Eurozone ETF EZU added about $4.04 billion and $3.46 billion in the quarter.

Gold Mining Lost Luster

VanEck Vectors Gold Miners ETF GDX shed about $3.12 billion in assets as gold prices remained weak in the second quarter as evident by about 0.1% losses seen in SPDR Gold Shares GLD. VanEck Vectors Junior Gold Miners ETF GDXJ too lost about $967.6 million in assets.

Small and Mid-Cap Out of Favor

Investors turned their face from small and mid-cap ETFs. Small-cap ETF iShares Russell 2000 ETF IWM and mid-cap ETFsSPDR S&P Midcap 400 ETF Trust MDY and iShares S&P Mid-Cap 400 Value ETF IJJ fell out of investor favor. The trio saw about $1.16 billion, $724.9 million and $639.5 million of asset outflows.

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SPDR-GOLD TRUST (GLD): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
ISHARS-R 2000 (IWM): ETF Research Reports
ISHARS-EAFE (EFA): ETF Research Reports
VANECK-GOLD MNR (GDX): ETF Research Reports
VANECK-JR GOLD (GDXJ): ETF Research Reports
ISHARS-EMU IDX (EZU): ETF Research Reports
VANGD-SP5 ETF (VOO): ETF Research Reports
SPDR-SP MC 400 (MDY): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
ISHARS-SP MC VL (IJJ): ETF Research Reports
VANGD-FTSE EM (VWO): ETF Research Reports
VANGD-FTSE EUR (VGK): ETF Research Reports
VANGD-FTSE DV M (VEA): ETF Research Reports
ISHARS-CR MS EA (IEFA): ETF Research Reports
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