With the year winding down and we get closer to the holidays, we saw a rush last week of ETF issuers launching new exchange-traded products before investor and market attention begins to wane.
There were a total of 35 ETFs launches last week from nine different issuers, including a new suite of 16 single-factor ETFs from Franklin Templeton that will compete with existing iShares products; a new lineup factors ETFs from Oppenheimer; and the first new ETF from Vanguard in nearly two years.
So far this year, we have seen 237 new exchange-traded products launch versus 210 at this time last year. For more on launches, filings and closures, visit the ETF Watch page.
There are now 2,074 U.S.-listed ETFs, with $3.29 trillion in assets under management.
Inflows Continue Despite Big ‘SPY’ Outflow
The first stock market sell-off in nine weeks didn't sap investors' appetite for exchange-traded funds, but it did lead to sizable outflows from one ETF in particular.
ETFs as a whole took in $3.3 billion in new money during the week ending Thursday, Nov. 9, according to FactSet. Inflows of $3.7 billion into international equity ETFs and $774 million into U.S. fixed-income ETFs were enough to offset the nearly $1 billion worth of outflows from U.S. equity ETFs.
This marks the first time investors pulled money from U.S. equity ETFs on a weekly basis since late September. One fund in particular was responsible for snapping the streak, the SPDR S&P 500 ETF Trust (SPY).
SPY's weekly outflows of $6.1 billion were far and away the most of any fund. SPY has seemingly been a popular vehicle for traders expressing short-term market views, but it hasn't gained much traction with longer-term investors this year, who have gravitated toward cheaper rivals.
Aside from SPY, other big losers included the iShares 20+ Year Treasury Bond ETF (TLT) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), with redemptions of $703 million and $561 million, respectively.
Japan Rising Again
This year has been one of the best years for the stock market in history―and it's not just U.S. stocks that have been rising. Equities around the world have been on a tear.
One of the markets that's been doing particularly well is Japan, where stocks have seen an under-the-radar rally that's recently accelerated since the landslide victory of Prime Minister Shinzo Abe.
Since Abe's victory on Oct. 22, the benchmark Nikkei 225 jumped nearly 7%, and now trades at its loftiest level in 25 years.
That's caught the eye of investors, who, since the election, have added a combined $900 million to the two largest Japan ETFs, the $17.7 billion iShares MSCI Japan ETF (EWJ) and the $9.3 billion WisdomTree Japan Hedged Equity Fund (DXJ) (year-to-date, the two ETFs still have combined outflows of $650 million).
The Nikkei hasn't touched a record high since 1989, when it reached nearly 39,000 amid a ballooning asset price bubble in the country. Today the index is still well below that level, at 23,000, but some analysts say the rally in Japan's stock market has much more room to run.
If that's the case, EWJ and DXJ, which are up this year by 21.9% and 20.2%, respectively, could continue to outperform. For comparison, the SPDR S&P 500 ETF Trust (SPY), which tracks large-cap U.S. stocks, is up 17.5% so far in 2017.
Drew Voros can be reached at firstname.lastname@example.org.
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