At month’s end, total ETF assets stood at $815 billion, up from $764.6 billion at the end of February and up from $484 billion a year ago, Morningstar said in its latest report about the ETF industry.
After 30 consecutive months of net inflows, iShares Barclays TIPS Bond’s TIP streak came to an end in March, as the fund experienced $73.6 million in net outflows.
Morningstar said many could be hunting for inflation protection elsewhere—namely in equities and commodities. Potential interest-rate hikes are on investors’ minds as they continue to shift their fixed-income exposures to the short end of the yield curve.
Meanwhile, iShares Barclays Short Treasury Bond SHV led the taxable bond asset class with $1.7 billion in net inflows in March, followed by iShares Barclays 1-3 Year Credit Bond CSJ, which added another $423.1 million in March. Conversely, iShares Barclays 20+ Year Treasury Bond TLT led taxable bond outflows with $133.0 in net redemptions for the month.
According to the report, yield-hungry investors also loaded up on junk bonds, as iShares iBoxx $ High Yield Corporate Bond HYG and SPDR Barclays Capital High Yield Bond JNK took in $464.3 million and $451.7 million last month, respectively.
Funds offering broad index exposure fared well in March, with SPDRs SPY, PowerShares QQQ QQQQ, and iShares S&P MidCap 400 IJH all making the overall top-10 inflows list for the month, pulling in $3.4 billion, $1.7 billion, and $451.1 million, respectively. On the flipside, iShares Russell 2000 Index IWM and Vanguard Small Capitalization VB saw net outflows of about $996.4 million and $441 million, respectively.
Vanguard Emerging Markets VWO attracted another $784 million last month and $2.8 billion in the first quarter. Last month EEM shed another $719.4 million and through Q1 has seen more than $4.2 billion head for the exits.
Morningstar said single-country funds topping international equity inflows with more than $200 million in net inflows included iShares MSCI Hong Kong EWH, iShares MSCI Australia EWA, iShares MSCI Canada EWC, Market Vectors Russia RSX, and iShares MSCI Mexico Investable Market EWW. In contrast, iShares FTSE/Xinhua China 25 FXI and iShares MSCI Japan EWJ saw net outflows $289.2 million and $119.2 million, respectively.
Leveraged ETFs with bullish exposure (two times and three times) experienced outflows of roughly $1.8 billion. Direxion Daily financial Bull 3X Shares FAS led the way with $646.9 million in outflows, followed by Ultra Financials ProShares UYG which saw $269.0 million in outflows. Demand for long-biased leverage was decidedly weak in March; top inflows went to PowerShares DB Gold Double Long with just $21.7 million in net inflows.
Morningstar said March was a busy month for ETF providers; a total of 18 new ETFs launched. In addition to these new funds, March saw two more prominent fund firms, J.P. Morgan Chase and Eaton Vance, toss their hats into the actively managed ETF ring, joining the likes of Goldman Sachs, Legg Mason, and T. Rowe Price.
The Morningstar report is available here.