August ETF Recap
August ETF Recap
Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.
Knight ETF Trading: A quiet August as expected however major indices were positive on the month including the DJIA +.64%, SPX +1.88%, and NASDAQ + 4.34%. Despite the record low exchange traded stock volume seen in August; the value traded remains nearly the same. This can be attributed to higher equity prices and is certainly viewed as a silver lining amongst traders. ETF volume was moderate on the month however there were sizable inflows into Gold, Emerging Markets, Corporate Bonds, and Volatility Linked Funds.
Flows: Recapping ETF volumes for the month of August, Knight accounted for 11.33% of advertised ETF block shares traded trading in 1,466 unique ETFs. (Autex Block Data 8/4/12)
US Equity ETFs: Despite the overall low share volume traded there were inflows of size into many broad based equity ETFs. VOO (Vanguard S&P 500 ETF); SPY (SPDR S&P 500 ETF Trust); IVW (iShares S&P 500 Growth Index) all saw an imbalance of trading from the buy side. Other broad based indices included DIA (SPDR DJIA Trust); QQQ (PowerShares QQQ Nasdaq 100); and XLG (Guggenheim Russell Top 50 ETF) saw inflows as well. Regarding the Russell 1k and 2k we saw flows into IWM (iShares Russell 2000) and buy side flows of IWF (iShares Russell 1000 Growth). One outflow to note was seen in OEF (iShares S&P 100 Index Fund).
Fixed Income ETFs: While not the large size of what we saw in the early months of 2012, once again we are seeing significant flows into corporate bond ETFs including LQD (iShares IBOXX Inv Grade Corp Bd), VCSH (Vanguard S/T Corp Bond ETF), and VCIT (Vanguard Int-Term Corporate). High yield is also seeing some inflows of size highlighted by JNK (SPDR Barclays Capital High Yield), and SJNK (Short-Term High Yield). The buy side also had a positive imbalance of muni buying seen in MUB (iShares S&P Nat Amt-Free Muni) and buying in mortgage backed securities including MBB (iShares Barclays MBS Bond FD). Not much regarding treasury inflows however international treasuries saw activity specifically of inflows into BWX (SPDR Barclays Capital Intl). Cash going to work was obvious from outflows in several treasury funds including BIL (SPDR Barclays Capital 1-3 Month), TLT (iShares Barclays 20+ Year TR), and TLO (SPDR Barclays Capital Long Term Treasury). Sizeable two sided flows were seen in BOND (PIMCO Total Return ETF) and in the inflation hedged TIP (iShares Barclays TIPS Bond).
International ETFs: A significant imbalance to the buy side was seen in several broad international ETFs including ACWX (iShares MSCI ACWI), VEU (Vanguard FTSE All World Ex US), CWI (SPDR MSCI ACWI EX-US) and EFA (iShares MSCI EAFE Index Fund). For individual countries we saw flows move into RSX (Market Vectors Russia ETF), EWY (iShares MSCI South Korea Ind), and EWA (iShares MSCI Australia Index). Emerging markets saw mixed flows with inflows into VWO (Vanguard MSCI Emerging Markets) and outflows of EEM (iShares MSCI Emerging Market Index). Broad outflows were led by EEB (Guggenheim BRIC ETF), and VXUS (Vanguard Total Intl Stock).
Currency and Commodity ETFs/ETNs: Flows have been quite strong back into gold headlined by GLD (SPDR Gold Trust), and IAU (iShares Gold Trust). The same conviction cannot be had for Silver as flows have been heavy but two way as seen in SLV (iShares Silver Trust), and AGQ (ProShares Ultra Silver). Inflows into broad-based commodity exposure was seen throughout the month as seen in DBC (PowerShares DB Commodity Index) and more concentrated into DBA (PowerShares DB Agriculture Fund). Commodity outflows were seen in OIH (market Vectors Oil Service), UNG (US Natural Gas Fund LP), and UCO (ProShares ULT DJ-UBS Crude Oil).
Sector ETFs: For the month of August sectors seeing inflows included XLB (Materials Select Sector SPDR), XLK (Technology Select Sector SPDR), XLE (Energy Select Sector SPDR), XHB (SPDR S&P Homebuilders ETF), and ITB (iShares DJ US Home Construction). A rotation was seen out of the following; VPU (Vanguard Utilities ETF), XLU (Utilities Select Sector SPDR), and VOX (Vanguard Telecom Service ETF).
Alternative/Specialty ETFs: Plenty of activity during the month was seen in many specialty ETFs, mostly ones which incorporated ways of achieving yield. They included SDIV (Global X Superdividend ETF), VIG (Vanguard Dividend Appreciation ETF), HDV (iShares High Dividend EQ FD), and PFF (iShares S&P Pref Stk Index Fund). AMLP (Alerian MLP ETF), and YMLP (Yorkville High Income MLP) saw buy side flows as MLPs continue to see interest. With volatility at its lows we have seen inflows pick up for several VIX products including; UVXY (ProShares Ultra VIX ST Futures), VXX (iPath S&P 500 S/T FU ETN), and XIV (Velocityshares Inv Vix SH-TM).
You may reach Michael directly at mcafiero@knight.com
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