In the month of October, it appears that investors became more bearish on U.S. equities and turned to other investments like international markets, fixed income and commodities for their portfolios.
All together, net inflows for international equity long ETFs was $7.47 Billion for the month which accounted for more than half of the gross inflows for the entire ETF industry. To take it a step further, of international ETFs, the Vanguard MSCI Emerging Markets (VWO) witnessed net inflows of $2.2 Billion and the iShares MSCI Emerging Markets (EEM) witnessed net inflows of $1.76 Billion. Together, these two ETFs comprised nearly 45% of the net inflows across all exchange traded products.
U.S. bond funds followed the international markets and were led by inflation protected securities like the iShares Barclays TIPS (TIP), an ETF that is constructed to enable investors to gain protection against inflation, which saw net inflows of $589 million. Another popular fixed income ETF was the iShares Barclays 1-3 Year Credit (CSJ), which indicated that an appetite for the short-end of the yield curve is emerging. In aggregate, bond ETFs saw inflows of nearly $3.1 Billion indicating that inflation is a concern amongst Wall Street.
The third asset class that investors fled to was commodities. In general, as investors become fearful of inflation and the U.S. dollar continues to weaken, commodities become more attractive. The United States Natural Gas (UNG) and the SPDR Gold Shares (GLD) led the commodities markets in net inflows, with $308 million and $272 million, respectively.
As for outflows, broad based U.S. equities were the culprits in the month of October with the SPDRs (SPY) leading the way logging net outflows of $2.3 billion, while the iShares Russell 2000 (IWM) lost nearly 8.5% of its September 30 AUM by witnessing a net outflow of $1.1 billion.
