August was a rough month for global equities as concerns over
higher rates and geopolitical worries kept stocks in check across
the board. In fact, during August,
lost a bit over 4% in the time frame, bringing the year-to-date
performance for the key fund down to a 12% gain.
While the month was somewhat rough in the U.S., European stocks
held up better than most. Many of these stocks also slumped in the
time frame, but it appears as if sentiment is turning thanks to
stronger data, less worries on the debt front, and a firmer
all the European ETFs here
It looks as if ETF investors are also starting to take note of the
trend and are betting on the space for the longer term. This is
evidenced by recent inflows into the space, as many European and
EAFE funds are leading the way in inflows for the trailing month.
Top European ETFs
For inflows for the top five unleveraged products, European (or at
least broad developed market ETFs) occupy four spots. All four also
pulled in more than half a billion dollars, a pretty impressive
feat considering that it was one of the worst months on record for
the broader ETF industry as more than $17.7 billion was lost in
terms of monthly flows.
Interestingly, the two biggest winners in inflows were the
Vanguard FTSE Europe ETF (
, and the
iShares MSCI EMU ETF (
, which added, respectively, $1.5 billion and $970 million in the
past month. This is rounded out by the
iShares MSCI EAFE ETF (
FTSE Developed Markets ETF (
as these added, respectively, $850 million and $570 million for the
time frame (See
Europe ETF Investing 101
This is quite the contrast when investors consider that nearly $15
billion flowed out of SPY in the same time period, while a number
of other key products, such as those tracking emerging markets or
, saw more than $1 billion in outflows as well.
The push towards European ETFs also continues the solid trend that
investors have been seeing in the summer quarter. All four of the
European-focused ETFs mentioned above have seen solid inflows in
that time frame too, with VGK adding more than $2.2 billion in the
What Does This Mean?
Clearly, investors are starting to buy into the European recovery
story, and are putting their money into European-focused ETFs in
order to play the trend. Broad European products are leading the
way, while funds that have a focus on developed markets and the
EAFE region are seeing solid interest levels too (read
4 Outperforming ETFs Leading Europe Higher
This is pretty impressive considering the sluggish trading in the
U.S. market during the time frame, and the general disdain for
American large cap stocks over the past month. Should this trend
continue, it could suggest that Europe may be due for a bounce and
that a broad play on the region may not be a bad idea.
Other Top Funds for Inflows
Beyond Europe, investors may also want to consider mid-caps if they
are looking for a domestic play instead. Over the past month, the
iShares Core S&P Mid-Cap ETF (
actually led all funds for inflows in the time frame, pulling in
roughly $2.14 billion.
ProShares Ultra Midcap 400 ETF (
dominated the leveraged sphere, as it attracted more than $1.3
billion, putting it almost a billion dollars ahead of any
other leveraged fund in the time period (see
all the Leveraged Equity ETFs
This suggests that investors are cycling out of large cap U.S.
stocks (to some extent) as well as emerging markets and longer
dated bonds. Instead, the focus has been on mid cap securities, and
By adding more funds in these segments, investors may be able to
ride a flows wave higher. These sectors have seen strong inflows
during a turbulent market environment, and thus could be poised to
run should market conditions improve this month.
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ISHARS-EAFE (EFA): ETF Research Reports
ISHARS-EMU IDX (EZU): ETF Research Reports
ISHARS-SP MID (IJH): ETF Research Reports
PRO-ULTR MC400 (MVV): ETF Research Reports
VANGD-FTSE DV M (VEA): ETF Research Reports
VANGD-FTSE EUR (VGK): ETF Research Reports
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