{"id":486,"date":"2017-04-05T15:38:21","date_gmt":"2017-04-05T19:38:21","guid":{"rendered":"https:\/\/www.etfresearchcenter.com\/articles\/?p=486"},"modified":"2017-04-05T15:38:21","modified_gmt":"2017-04-05T19:38:21","slug":"march-fund-flows-em-etfs-hoover-up-assets","status":"publish","type":"post","link":"https:\/\/www.etfrc.com\/articles\/index.php\/2017\/04\/05\/march-fund-flows-em-etfs-hoover-up-assets\/","title":{"rendered":"March Fund Flows: EM ETFs Hoover Up Assets"},"content":{"rendered":"

The flood of money into ETFs continued in March, though not quite as robust as first blush. According to our database, equity funds saw roughly $39.6 billion in new money for the month, while Bond ETFs captured some $9.2 billion, representing increases in overall assets under management of 1.8% and 1.9%, respectively. However, after adjusting for increases in short interest, the \u201cnet long\u201d inflows were somewhat lower, at $34.9 billion for equities and $6.7 billion for bonds (Figure 1).<\/p>\n

We believe \u201cnet long\u201d flows provide better insight into investor sentiment, since some inflows are used to create new short positions. Overall short interest in equity funds ticked up from 6.8% to 6.9% of shares outstanding, but for bond funds increased from 3.3% to 3.8%\u2014still small relative to total shares outstanding, but nonetheless an increase of 14% in shares held on the short side, most likely a reflection of investors\u2019 anticipation of higher interest rates (Figure 2).<\/p>\n\n\n\n\n\n
Figure 1:\u00a0Flows by Asset Class<\/span><\/strong>
\nStandard vs. Net Long, March 2017, in $bns<\/em><\/span><\/td>\n		<\/td>\nFigure 2:\u00a0Short Interest by Asset Class<\/span><\/strong>
\nas a %-age of Shares Outstanding<\/em><\/span><\/td>\n<\/tr>\n
\u00a0\"\"<\/td>\n\u00a0<\/strong><\/td>\n\u00a0\"\"<\/td>\n<\/tr>\n
Source: DTCC and ETF Research Center<\/em><\/td>\n\u00a0<\/em><\/td>\nSource: DTCC, FactSet & ETF Research Center<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

One consistent trend across both equity and fixed income markets was investors\u2019 enthusiasm for emerging market assets. In absolute terms emerging market ETFs have a much smaller asset base than their developed market counterparts of course, but they drew in an outsized portion of new money last month. Specifically, only 8.0% of all equity ETF assets were invested in emerging market stocks as of the beginning of March, but these ETFs took in 15.8% of net long flows during the month. As a result, net long emerging market ETF assets grew 3.5% while developed markets increased just 1.5%.<\/p>\n

The big winner here was the iShares Core MSCI Emerging Markets ETF (IEMG<\/a>), which saw total inflows equivalent to about 10% of assets, a big jump in one month for such a large fund. The $27 billion IEMG is now almost as big as the bellwether iShares MSCI Emerging Markets ETF (EEM<\/a>), which has $30 billion in assets. There\u2019s huge overlap<\/a> between the two, but for investors looking to choose one we\u2019d go with IEMG, which is more diverse and much cheaper at 14 basis points, compared to a stated expense ratio of 72 basis points for EEM.<\/p>\n

The disparity was even more pronounced on the fixed income side. Long money flows for emerging market bond ETFs totaled 8.2% of assets, far outstripping other categories (Figure 3). Here again the biggest beneficiary was an iShares fund, its JP Morgan USD Emerging Markets Bond ETF (EMB<\/a>), which took in more than half a billion dollars in new money, growing assets to nearly $10 billion.<\/p>\n

Corporate bond ETFs\u2014which include both investment grade and \u201cjunk\u201d bonds\u2014are an interesting case. The segment actually had positive inflows of about $1.6 billion, or 1.0% of assets under management. \u00a0However, there was a large increase in short interest, from 4.1% to 5.7%, for a roughly one-third increase in total shares held short! That\u2019s an increase of about $2.6 billion in AUM on the short side, thus \u201cwiping out\u201d the $1.6 billion inflows measured the standard way. The result is therefore equivalent to a small outflow of funds as shown in Figure 3).<\/p>\n\n\n\n\n\n
Figure 3: Fixed Income Fund Flows by Category<\/span><\/strong>
\nas a %-age of starting AUM, March 2017<\/em><\/span><\/td>\n<\/tr>\n
\"\"<\/td>\n<\/tr>\n
Source: DTCC and ETF Research Center<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

What do you think? Is now a good time to load up on emerging market stocks and bonds?<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The flood of money into ETFs continued in March, though not quite as robust as first blush. According to our database, equity funds saw roughly $39.6 billion in new money for the month, while Bond ETFs captured some $9.2 billion, representing increases in overall assets under management of 1.8% and 1.9%, respectively. However, after adjusting…<\/p>\n","protected":false},"author":2,"featured_media":276,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[19,18],"tags":[22,34,102],"class_list":["post-486","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-emerging-markets","category-fund-flows","tag-eem","tag-emb","tag-iemg","description-off"],"_links":{"self":[{"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/posts\/486","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/comments?post=486"}],"version-history":[{"count":5,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/posts\/486\/revisions"}],"predecessor-version":[{"id":496,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/posts\/486\/revisions\/496"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/media\/276"}],"wp:attachment":[{"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/media?parent=486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/categories?post=486"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/tags?post=486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}