ETF Inflows Show Key Sentiment Change: Risk & Income Tops Safe-Havens (SPY, GLD, SHY, JNK, HYG, IWM, VWO, DIA)

IndexUniverse.com has now released its July 2012 ETF Fund Flows data and the report is showing some key changes for the month on different asset classes.  The total ETF fund flows were a gain of $16 billion in July.  This now puts the total U.S. ETF assets (including market movements) up by 2.6% to $1.209 trillion. July was a return to risk after “Sell in May and go away.”

If you noticed that rise in equities, the risk-oriented ETFs support that move.  IndexUniverse noted, “Roughly three quarters of net inflows, or some $12.5 billion, went into U.S. equities ETFs in July, as investors embraced risk-on strategies despite mounting uncertainties surrounding the global economy.”  The old adage is that the market often crawls up a wall of worry.

Fixed income ETFs also brought in about $1.75 billion in new assets. The difference here is that the majority of those assets actually went to international bond strategies rather than into U.S. debt funds.  With the rates that the U.S. Treasury pays, ask yourself if you are surprised there. The monthly flow report even went on to say, “Investors by and large shunned U.S. Treasury ETFs; the iShares Barclays 1-3 Year Treasury Bond Fund (NYSEMKT: SHY) was last month’s least-popular ETF, bleeding $1.6 billion in assets. Several Treasury funds were found among the month’s top money losers.”

For equities it is the S&P 500 which ruled the roost for total inflows as the most popular fund in July was the SPDRS&P 500 ETF (NYSEMKT: SPY) with total inflows of $2.9 billion in July to a whopping size of $107.94 billion in total assets.

Goldbugs beware!!!  The SPDR Gold Trust (NYSEMKT: GLD) was said to be “another safe-haven ETF to be shunned by investors” as the fund saw $1.38 billion in asset outflows according to the report.  That ETF will still be holding up just fine though as the current trust’s homepage says its size is still some $64.33 billion in assets.

Here is more risk-evident trading:

Junk bonds win!: iShares iBoxx $ High Yield Corporate Bond (NYSEMKT: HYG) saw almost $1 billion in inflows to end with some $15.9 billion in total assets; SPDR Barclays Capital High Yield Bond (NYSEMKT: JNK) saw some $619 million in asset inflows to end with just over $11.5 billion in assets.

iShares Russell 2000 (NYSEMKT: IWM) saw just over $1.6 billion in inflows to end with some $16 billion in assets.

Vanguard MSCI Emerging Markets (NYSEMKT: VWO) saw more than $1.5 billion to end with just under $52.5 billion in total assets.

Dividend Chasing in DJIA: SPDR Dow Jones Industrial Average Trust (NYSEMKT: DIA) saw over $850 million in asset inflows to end with almost $12 billion in total assets.

JON C. OGG