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Q1 ETF Asset Report: What's Hot, What's Not

Sanghamitra Saha

The first quarter of 2020 has been fraught with worries for Wall Street, starting from the Middle-East tensions to the coronavirus outbreak. Global recessionary fears resurfaced in the quarter. Wall Street snapped its longest bull run ever and went on to record its worst quarter since fourth-quarter 2008 (read: Top ETF Stories of First Quarter).

Amid this scenario, we highlight ETF asset flows of the first quarter (per etf.com).

U.S. Equities Were Hot

Vanguard S&P 500 ETF VOO, Vanguard Total Stock Market ETF VTI, iShares Core S&P 500 ETF IVV and Invesco QQQ Trust QQQ have added about $18.4 billion, $8.73 billion, $4.02 billion and $4.97 billion in assets, respectively. As U.S. equities have been extremely battered, investors probably tapped the cheaper valuation.

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Need for Cash Favored Short-Term Treasuries

SPDR Bloomberg Barclays 1-3 Month T-Bill ETF BIL and iShares 1-3 Year Treasury Bond ETF SHY added about $9.22 billion and $5.10 billion, respectively. Liquidity was the need of the hour in Q1, at least till the Fed intervention. So, short-term bond ETFs like BIL and SHY (that yield about 1.75%, and 1.95% annually, respectively, amid a very low yield environment) garnered solid investor interest.

Investment-Grade Corporate Bond ETF Topped

Failing to contain the coronavirus-led acute market rout by its crisis-era policy launch, the Fed announced a fresh set of stimuli on Mar 23. The Fed added that the purchases of Treasury and mortgage securities are unlimited.

Among other steps, the Fed confirmed it would buy investment-grade exchange-traded funds that track the corporate bond market, a first for the U.S. central bank. However, the Fed cannot own more than 20% of any one ETF or 10% of individual corporate bonds.

The very announcement has led iShares iBoxx USD Investment Grade Corporate Bond ETF LQD to haul in about $5.18 billion in assets (read: All-Out Fed Support: Buy Highly-Rated Corporate Bond ETFs).

Gold Maintained Glow

Safe-haven rally amid the coronavirus fear probably has boosted the lure for gold. Gold bullion ETF SPDR Gold Trust GLD has raked in about $3.84 billion in assets.

ESG ETFs Held Up Well

iShares ESG MSCI U.S.A. ETF ESGU fetched about $2.79 billion on assets in the quarter as the segment remained a hot since the pre-outbreak period.Net inflows to ESG ETFs in the first three months of 2020 totaled about 6.7 billion. At the end of March, which was the worst month for Wall Street since October 2008, total assets of ESG ETFs were $19.1 billion, down from the peak of $20.8 billion in February but still higher than any point in 2019, noted Bloomberg (read: ESG ETFs Appear Unscathed by the Coronavirus Carnage).

Emerging Markets Lost

Emerging markets ETF iShares MSCI Emerging Markets ETF EEM lost about $3.97 billion as investors fled the risky investing area. The greenback strength may have made investors cautious about emerging market investing in the quarter. Plus, several emerging economies area also striving hard to contain coronavirus.

Financials Fell Out of Investors’ Favor

Financial Select Sector SPDR Fund XLF saw about $2.39 billion in assets gushing out as rock-bottom interest rate levels. With cities on quarantine and activities coming to a standstill, demand for loans from household and corporations is likely to drop. Some big American banks have also suspended buybacks (read: Are Bank Stocks & ETFs "Very Cheap" or More Pain Looms on?).

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Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
SPDR Gold Shares (GLD): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
iShares MSCI Emerging Markets ETF (EEM): ETF Research Reports
 
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD): ETF Research Reports
 
Vanguard Total Stock Market ETF (VTI): ETF Research Reports
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
Vanguard S&P 500 ETF (VOO): ETF Research Reports
 
SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL): ETF Research Reports
 
iShares 1-3 Year Treasury Bond ETF (SHY): ETF Research Reports
 
iShares ESG MSCI USA ETF (ESGU): ETF Research Reports
 
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Zacks Investment Research
 
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