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ETF Specialist

ETF Flows Slow to a Trickle

Following strong inflows in September, investors hit the brakes in October.

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Just $1.9 billion of new money trickled into exchange-traded funds in October following the strong $33 billion that poured in during September. Investors pulled more than $11.3 billion from U.S.-stock funds, opting to put $6.5 billion to work in international stocks and $4 billion into bonds. Gold funds continued to shine, as the commodities asset class attracted $1.6 billion. Overall ETF inflows of $1.9 billion in October was the weakest monthly showing so far in 2012, and it comes amid a slowdown in new ETF issuance and a uptick in ETF closures. For the year to date, there have been only 159 ETF launches and 97 closures, for a net increase of 62, compared with a net increase of 278 in all of 2011. See the first table below.

Among Morningstar categories, China region, diversified emerging-markets, and Europe stock each attracted inflows of more than $1 billion. Emerging-markets bond also saw hearty inflows, but investors pulled back on high-yield bonds, perhaps taking profits after several months of strong inflows and returns. The category lost $800 million in investor capital.

Michael Rawson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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