ETF Asset Flow Roundup: U.S. Equity Gains, Treasury Lags - ETF News And Commentary

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The U.S. stock market is slowly and steadily extending its string of record highs amid uncertainties related to Ukraine and Iraq. Last week, the S&P 500 hit new record highs for the twenty-second time this year while Dow Jones climbed to all-time highs and is approaching its 17,000 threshold. The Nasdaq Composite index also jumped to its highest level in 14 years.

The record-breaking numbers came from better economic fundamentals, a strengthening job market, rising merger & acquisition talks and pickup in stock buyback activity. Further, the Fed reiterated its commitment to keep its interest rates near zero for a considerable period of time that propelled the market to new highs yet again (read: Will Large Cap ETFs Continue to Surge? ).

Moreover, earnings expectation for the ongoing second quarter seems inspiring as the companies in the S&P 500 are expected to post 3.2% earnings growth, which is more than double the earnings growth of the first quarter, as per the Zacks Industry Trends .  

These have resulted in strong inflows into the U.S. equity funds, as per ETF.com . The ultra-popular SPDR S&P 500 ( SPY ) led the way last week, gathering more than $3.8 billion in capital. This boosted the fund's asset base to around $168.2 billion. This ETF provides exposure to the large cap segment of the broad U.S. equity market by tracking the S&P 500 index, and holds 503 stocks in its basket.

Apple ( AAPL ) and Exxon Mobil ( XOM ) occupy the top two positions with 3.3% and 2.5% of assets, respectively. Other securities hold less than 1.80% share. The fund is widely spread across a number of sectors with information technology, financials, health care, consumer discretionary, energy and industrials accounting for double-digit exposure.

The product charges 9 bps in fees per year and trades in average daily volume of more than 107 million shares. The ETF was up about 0.9% last week and has a Zacks ETF Rank of 2 or 'Buy' rating with a Medium risk outlook (read: 3 Non-Leveraged ETFs Beating SPY ).

The most popular iShares Core S&P Mid-Cap ETF ( IJH ) , with a total asset base of around $23.3 billion, accumulated over $1.8 billion. The fund tracks the S&P MidCap 400 Index, holding 401 stocks. It is well spread out across all components as each holds less than 0.75% share, preventing concentration.

However, the product is tilted toward financials at 22.7%, while industrials, information technology and consumer discretionary round off to the next three. The ETF charges 15 bps in annual fees while trades in good average daily volume of 1.1 million shares. The fund added 1.6% last week and has a Zacks ETF Rank of 3 or 'Hold' rating with Medium risk outlook.

Apart from broad equities, Consumer Staples Select Sector SPDR ETF ( XLP ) emerged as the third highest asset gainers. This fund, having AUM of $6.6 billion and average daily volume of 7.9 million shares, saw inflows of about $1.1 billion last week. With an expense ratio of just 16 bps, XLP is a cheap way of getting a diversified exposure to the consumer sector by tracking the S&P Consumer Staples Select Sector Index (read: 2 Recession Proof Sector ETFs for This Stormy Market ).

Holding 42 securities, the product allocates higher to big giants like Procter & Gamble ( PG ), Coca Cola ( KO ) and Philip Morris International ( PM ) with a combined 30.6% share. From an industry look, about one-fourth of the portfolio is dominated by food & staples retailing, followed by household products (19.9%) and beverages (19.4%). The fund gained 1.1% last week and has a Zacks ETF Rank of 4 or 'Sell' with a Medium risk outlook.

U.S. Treasury ETFs Losing Appeal

Though the falling yields and tumbling interest rates are driving up the appeal for Treasuries which include U.S. government bonds with duration of six years or longer, these were the worst asset losers last week. iShares 7-10 Year Treasury Bond ETF ( IEF ) with an asset base of around $6.3 billion and average daily volume of about 1.7 million shares, pulled out more than $3.3 billion in capital (read: 3 Sector ETFs Benefiting from Plunging Interest Rates ).

This fund provides targeted exposure to mid-term securities with average maturity of 8.51 years and effective duration of 7.62 years by tracking the Barclays U.S. 7-10 Year Treasury Bond Index. The product has a lower default risk as it focuses on top-rated bonds by Moody's and the S&P. IEF is one of the low cost choices in the bond space, charging just 15 bps in annual fees. It has a Zacks ETF Rank of 3 with High risk outlook and lost 0.03% last week.

ProShares Ultra 7-10 Year Treasury ( UST ) shed $1.2 billion, ending up with an asset base of $647.9 million. This ETF seeks to deliver twice (2x or 200%) the daily performance of the Barclays U.S. 7-10 Year Treasury Bond Index. The fund lost 0.09% last week and trades in average volume of 1.7 million shares per day (see: all the Government Bond ETFs here ).

Long-term U.S. Treasury ETFs like iShares 20+ Year Treasury Bond ( TLT ) also saw a huge outflow of $279.5 million last week. The fund targets long-term securities with average maturity of 27.11 years and effective duration of 16.73 years and tracks the Barclays U.S. 20+ Year Treasury Bond Index. The ETF lost nearly 0.3% last week and has a Zacks ETF Rank of 3 with High risk outlook.

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SPDR-SP 500 TR (SPY): ETF Research Reports

ISHARS-SP MID (IJH): ETF Research Reports

SPDR-CONS STPL (XLP): ETF Research Reports

ISHARS-7-10YTB (IEF): ETF Research Reports

PRO-ULT 7-10 YT (UST): ETF Research Reports

ISHARS-20+YTB (TLT): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: SPY , IJH , XLP , IEF , UST

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