Michael Cafiero – Vice President ETF Trading – Knight Capital Americas, L.P.
Knight ETF Trading: News of a Fed Tapering along with many questions particularly in Asia made June quite a volatile month. ETF flows were extremely strong throughout the month in essentially all asset classes.
Flows: Month to date, Knight ETF Trading has traded in 1,491 ETFs accounting for 13.99% of total ETF volume. (Autex Block Data 6/27/13)
US Equity ETFs: S&P flows were heavy but two sided in SPY (SPDR S&P 500 ETF TRUST). We saw heavy flows into IVV (ISHARES CORE S&P 500 ETF) and VTI (ISHARES CORE S&P 500 ETF). VUG (VANGUARD GROWTH ETF) and IWF (ISHARES RUSSELL 1000 GROWTH) continued to see buyers as they did in May. Notable outflows were seen in IWM (ISHARES RUSSELL 2000) and IJR (ISHARES CORE S&P SMALL-CAP).
Fixed Income ETFs: We saw heavy selling in most fixed income ETFs with the only significant bright spot in terms of inflows being in floating rate funds. Broad bond funds were being sold across the board as seen in outflows of BND (VANGUARD TOTAL BOND MARKET), AGG (ISHARES CORE TOTAL US BOND M) and BOND (PIMCO TOTAL RETURN ETF). Corporate bond funds have had plenty of sellers as well particularly in LQD (ISHARES IBOXX INV GR CORP BD) and VCIT (VANGUARD INT-TERM CORPORATE). Sellers of TIPS; TIP (ISHARES BARCLAYS TIPS BOND) were seen throughout the month as well as municipal bonds including MUB(ISHARES S&P NAT AMT-FREE MUN) and HYD (MARKET VECTORS HI YLD MUNI). As mentioned floating rate funds including FLOT (ISHARES FLOATING RATE NOTE) and FLRN (SPDR BARCLAYS INVESTMENT GRA) saw sizable inflows as many look for ways to absorb the effects of rising interest rates. BKLN (POWERSHARES SENIOR LOAN), and SRLN(SPDR BLACKSTONE/GSO SEN LOAN) also had strong inflows for the month.
International ETFs: Heavy volume in international ETF names continued as well. For emerging markets we saw sellers of EEM (ISHARES MSCI EMERGING MKT IN) while there were buyers of VWO (VANGUARD FTSE EMERGING MARKE) and IEMG (ISHARES CORE MSCI EMERGING. We also saw continued buyers of EWX (SPDR S&P EMERGING MKTS SMALL) and GWX (SPDR S&P INTL SMALL CAP). For broad international funds; flows were heading into ACWX (ISHARES MSCI ACWI EX US INDX), VXUS (VANGUARD TOTAL INTL STOCK) and VEA (VANGUARD FTSE DEVELOPED ETF). For individual countries we saw buyers of EWD(ISHARES MSCI SWEDEN INDEX FD), DXJ(WISDOMTREE JAPAN HEDGED EQ), and EWU (ISHARES MSCI UNITED KINGDOM). Outflows were seen specifically in EWJ(ISHARES MSCI JAPAN INDEX FD), ERUS (ISHARES MSCI RUSSIA), and EWS (ISHARES MSCI SINGAPORE).
Commodity ETFs/ETNs: Continued selling of gold seen in outflows of GLD (SPDR GOLD TRUST), and IAU (ISHARES GOLD TRUST) while inflows into ZSL (PROSHARES ULTRASHORT SILVER) signaled silver bears as well. DBA (POWERSHARES DB AGRICULTURE F) saw solid inflows over the month while DBC (POWERSHARES DB COMMODITY IND) saw sizeable outflows.
Sector ETFs: For sector funds we saw buyers on the month of XLF (FINANCIAL SELECT SECTOR SPDR),IYF (ISHARES DJ US FINANCIAL SECT), and XLB(MATERIALS SELECT SECTOR SPDR). Sellers were seen in names including IYW(ISHARES DJ US TECHNOLOGY SEC), and IGF (ISHARES S&P GLOBAL INFRASTR),
Alternative/Specialty ETFs: Significant selling for the month in the preferred space specifically in PFF(ISHARES S&P PREF STK INDX FN), and IPFF (ISHARES S&P INTL PREF STOCK). For REITs flows remain heavy by two sided specifically in IYR (ISHARES DJ US REAL ESTATE), and VNQ (VANGUARD REIT ETF).
You may reach Michael directly at firstname.lastname@example.org
This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, L.P. (“KCA”), a subsidiary of Knight Capital Group, Inc. (“Knight”). The information contained herein may be the personal perspective of the Knight Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but Knight does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of Knight, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or a request for a copy of this document should be referred to your Knight Representative.
Knight Capital Group, Inc. (“Knight”) is comprised of trading and related entities under common control such as Knight Capital Americas, L.P., Knight Capital Europe Limited (a U.K. registered broker-dealer), Knight Capital Asia Limited (a Hong Kong registered broker-dealer), Hotspot FX LLC and Knight Execution and Clearing Services LLC.