International and commodity funds attracted the lion’s share of new assets flowing into the exchange-traded fund [ETF] space in July. According to State Street Global Advisors [SSgA], international ETFs assets jumped $1.65 billion in July, while commodity fund assets rose $1.48 billion.
The rise in commodity assets was more impressive, however, as it came off of a much smaller base: The new funds represented a 16 percent jump in total assets from June, compared to just a 2 percent rise for the international funds. The strong growth of the streetTRACKS Gold Shares (NYSEARCA:GLD) and the Deutsche Bank Commodity fund (NYSEARCA:DBC) deserve most of the credit.
Specialty funds posted even better growth rates, with assets rising 18 percent in July and an astonishing 356 percent year-to-date. Those numbers, however, come off of relatively small bases.
Across the industry, U.S.-listed ETF assets rose $4 billion in July, as gains in the aforementioned sectors (as well as sector ETFs and fixed-income ETFs) were offset by a $1.2 billion drop in style ETF assets.
Surprisingly, REIT funds attracted more assets than any other sector in the U.S. market, pulling in $1.2 billion in July, despite a pullback in those stocks and mounting concerns about the future of the real estate market.
On the size/style front, money flooded out of large-caps in July, with $1.2 billion fleeing the style, mostly in favor of small-caps, which saw their assets jump by $2.3 billion. That came despite a strong outperformance by large stocks over small-caps in July, with large-cap names rising 0.4 percent against a 3.1 percent loss for the small fry. Large-cap ETFs have now lost assets on a year-to-date basis.
Among individual ETFs, the S&P 500 SPDR (NYSEARCA:SPY) continues to be the largest fund.
Looking at providers, Barclays Global Investors [BGI iShares] continues to dominate the U.S. ETF market with a 59 percent share of all assets. BGI has grown its market share by 2.2 percent year-to-date, at the expense of SSgA (down 2.3 percent) and The Bank of New York (also down 2.3 percent). Vanguard (up 0.9 percent) and PowerShares (up 0.6 percent) have also captured market share this year.
BGI also has the largest share of assets of any manager outside the U.S., with 22.5 percent of all ex-U.S. assets under management. That compares to 13 percent for Nomura Asset Management (with a dominant position in Japan) and 12 percent for both Indexchange and Lyxor (who focus on Europe). BGI is helped on the international front by a dominant position in the Canadian market, where it holds $11.4 billion of the $11.7 billion under management.
A Look At The Markets
On a performance basis, emerging markets were the place to be in July, and in particular, the emerging markets of Europe were hot. According to Standard and Poor’s, emerging markets rose 1.73 percent for the month, while European emerging markets jumped 4.5 percent jump. New economies in the Asia-Pacific region fell slightly for the month.
The development markets were more subdued. U.S. markets turned in a flat performance for the month, while European markets rose 1.5 percent. The S&P/Citigroup World Index rose 0.32 percent.
On a country level, emerging markets like Colombia (20 percent), Egypt (18 percent) and Poland (18 percent) led the way up. Conversely (and strangely), Luxembourg was the big loser, with shares dropping 14.5 percent on the month.
(ETF data from SSgA. Market Data from S&P.)