If nothing else, ETFs are hardy little buggers.
According to an IndexUniverse report, overall flows into U.S.-listed exchange-traded products were about $4.11 billion in May. Of course, that was thanks to investors’ bloodlust for bonds, which mostly offset their rapid-fire exodus from equities (by about 6%-7%, if you’re counting), putting ETF total assets just below April’s record $1.138 trillion under management.
Surprise, surprise.
A fantastic collusion of eurozone bleeding, concerns over slowdowns in the roaring emerging markets of China and India, and a mass checkout for summer have made the line for fixed-income funds longer than the thrill-seekers’ queue for Cedar Point’s Maverick. Even a record-low yield that’s dangerously approaching CD levels isn’t scaring people off from 10-year Treasurys.
Investors rushed to safety in May, with seven of the month’s 10 most-popular funds focused on fixed income — including the life of the party, the Vanguard Total Bond Market ETF (NYSE:BND), which brought in $1.23 billion, according to IU data. Vanguard rode the success of BND and other funds to become the top firm in asset gathering, adding $6.7 billion in assets, while BlackRock’s (NYSE:BLK) iShares and State Street’s (NYSE:STT) Global Advisors division saw respective outflows of $683.5 million and $1.78 billion.
The month’s new funds also reflected the quest for yield. While only eight ETFs launched last month, six were targeted toward income investors — though two nefariously so.
However, investors were at least discerning about their bonds in May. Two junk-bond ETFs — the SPDR Barclays Capital High Yield Bond ETF (NYSE:JNK) and iShares iBoxx $ High Yield Corporate Bond Fund (NYSE:HYG) — saw a respective $1.17 billion and $522.1 million in outflows, making them IndexUniverse’s Nos. 2 and 9 “Biggest Losers.” JNK has more than wiped out all its gains through the first four months of 2012, finishing May down 1% for the year.
IndexUniverse’s No. 1 “Biggest Loser” was the iShares MSCI Emerging Markets Index Fund (NYSE:EEM), which saw $1.54 billion head for the doors.
The flight from junk bonds smacks in the face of news from earlier in the month that Vanguard would be closing its High-Yield Corporate Fund (MUTF:VWEHX) to “most new accounts” because of excessive cash inflows.
The full report can be viewed at IndexUniverse.
Kyle Woodley is the assistant editor of InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley.
