ETF investors headed for the exits in May
Rough global markets led to $770 million in net outflows last month.
By Don Dion, TheStreet
The National Stock Exchange's new report on ETF flow data for May provides a wealth of information on investor preferences.
Overall, May was a trying month for investors. As the global marketplace ran into turmoil, investor interest in exchange-traded funds waned. For the first time in 2011, the industry saw net outflows. The $777 million in net outflows marked a dramatic shift from April, when there were $20 billion in inflows.
Industry leaders including State Street (STT), PowerShares, and BlackRock (BLK) witnessed the most staggering outflows, totaling $5.98 billion, $2.16 billion and $1.95 billion respectively. Smaller fund providers such as ETF Securities and Guggenheim ran into notable headwinds as well.
Much of these ETFs' outflows can be attributed to general investor disinterest in veteran broad index-based ETFs. SPDR S&P 500 ETF (SPY), PowerShares QQQ (QQQ), and iShares Russell 2000 Index Fund (IWM) led the industry with outflows in May, with $4.91 billion, $2.54 billion, and $2.06 turning to the exits.
Many of the largest physically based precious-metals ETFs were shunned as well. As volatility arose across the commodities spectrum, investors fled funds such as iShares Silver Trust (SLV) and SPDR Gold Trust (GLD).
Interestingly, there was one physically based precious-metals fund that proved popular in May. The iShares Gold Trust (IAU) ended the month with net inflows totaling $165 million. As in recent months, investor preference for IAU over GLD can likely be traced to the iShares product's reduced expense ratio.
Post continues after video:
Although the industry as a whole witnessed net outflows during May, it is important to note that not all fund providers closed out the month in the red. On the contrary, Vanguard and Van Eck managed to buck the trend, gathering up $7.05 billion and $985 million respectively.
Much of Van Eck's gains in May can be traced to a single fund, the Market Vectors Agribusiness ETF (MOO). During the month, this fund topped the list of inflow recipients, gathering nearly $1.50 billion as investors clamored for agriculture-related equities. Interestingly, the same could not be said for futures-based agriculture ETFs. The PowerShares DB Agriculture ETF (DBA) ended the month with $374 million in outflows, placing it among the 10 largest decliners.
Vanguard funds dominated the ranks of major inflow recipients, accounting for five of the top 10 positions. Among the products that saw the most popularity were the Vanguard MSCI MidCap ETF (VO), Vanguard MSCI Small Cap ETF (VB), Vanguard MSCI Small Cap Growth ETF (VBK), and Vanguard MSCI Emerging Market ETF (VWO).
Many of the industry's biggest asset gainers were defense-focused, including the Consumer Staples Select Sector SPDR (XLP), Healthcare Select Sector SPDR (XLV), iShares Barclays 20+ Year Treasury Index Fund (TLT) and PowerShares DB U.S. Dollar Index Bullish (UUP) saw heavy inflows as investors sought protection from the market's volatility.
The same could be said for commodity-related international funds. Market Vectors Russia ETF (RSX) and iShares MSCI Canada Index Fund (EWC) saw $496 million and $321 million exit. China proved unpopular as well: the iShares FTSE China 25 Index Fund (FXI) saw $679 million in outflows.
May's ETF flow data properly reflected the cautious and jittery market atmosphere that embodied a trying month. If the market's soft spot persists as we close out the first half of 2011, many of the same themes that we witnessed during May will likely remain in play.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Shares of Plug Power took a beating Tuesday after an analyst listed the fair value of the stock at 50 cents.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.