Yield-hungry investors also loaded up on junk bonds, while rate hike fears push fixed-income investors to the short end of the yield curve.
Investors plowed some $19.7 billion into ETFs in March. Those inflows helped push total net inflows for the ETF industry to $7.7 billion for the first quarter of 2010.
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.
Short Duration and Junk Bonds Rule in March
After 30 consecutive months of net inflows, iShares Barclays TIPS Bond's
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. IShares Barclays Short Treasury Bond
Yield-hungry investors also loaded up on junk bonds, as iShares iBoxx $ High Yield Corporate Bond
Investors Pile into the SPDRs and Cubes and Dump Small-Caps
Funds offering broad index exposure fared well in March, with SPDRs
VWO Continues to Chip Away at EEM
Vanguard Emerging Markets
Investors Resume Gold Buying Last Month
After kicking off the year with $902.4 million in net outflows in January and February, SPDR Gold Trust
Demand for Short Exposure Trounces Longs in Leveraged ETFs
Leveraged ETFs with bullish exposure (2 times and 3 times) experienced outflows of roughly $1.8 billion. Direxion Daily financial Bull 3X Shares
Investors favored leveraged ETFs with bearish exposure (negative 2 times and negative 3 times); those funds pulled in a total of $1.4 billion in net new assets in March. Top inflows here went to Direxion Daily Financial Bear 3x Shares
A Busy Month for New ETF Launches
March was a busy month for ETF providers; a total of 18 new ETFs launched:
--Claymore (now a Guggenheim company) launched Wilshire 5000 Total Market (
--On March 11, Direxion Funds launched six funds offering leveraged long and short exposure to a BRIC portfolio (Brazil, Russia, India, and China), India alone, and the semiconductor industry. With the addition of these ETFs, Direxion now offers 34 leveraged and inverse ETFs.
--On March 10, State Street launched SPDR S&P Russia
--On March 12, First Trust launched two funds--First Trust ISE Global Copper Index
--IndexIQ, which is generally known for its hedge fund strategies ETFs, launched two ETFs on March 23--IQ Canada Small Cap ETF (
--On March 18, ProShares launched Short FTSE/Xinhua China 25 (
--On April 1, UBS launched UBS E-TRACS Alerian MLP Infrastructure Index (
More Fund Firms Join the ETF Party
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.
On March 10, J.P. Morgan filed for exemptive relief with the SEC--initial steps needed for firms planning to offer ETFs for the first time. In its filings, J.P. Morgan, which has about $100 billion in long-term mutual fund assets, disclosed that it plans to offer both index-based and actively managed ETFs.
Eaton Vance, popular for its closed-end funds and mutual funds, filed for exemptive relief with the SEC on March 5. In its filing, the company, with about $150 billion in total assets under management, disclosed it plans to initially launch five actively managed ETFs: Enhanced Short Maturity, Government Limited Maturity, Intermediate Municipal Bond, Prime Limited Maturity, and Short Term Municipal Bond. This will put the firm in direct competition with another recent (and very successful) entrant into the ETF industry: PIMCO.
John Gabriel is an ETF analyst with Morningstar and contributor to Morningstar's ETFInvestor newsletter.
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Disclosure: Morningstar licenses its indexes to certain ETF and ETN providers, including Barclays Global Investors (BGI), First Trust, and ELEMENTS, for use in exchange-traded funds and notes. These ETFs and ETNs are not sponsored, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in ETFs or ETNs that are based on Morningstar indexes.