Tag Archives: SPDR Gold Trust

U.S. Large-Caps’ Net Cash Inflows Top Bonds

Net cash inflows in U.S.-listed ETFs surged to $55.8 billion in the third quarter, far exceeding the average quarterly inflows of $33.8 billion seen over the last three years, according to the ETF research team at Morgan Stanley Smith Barney. With $133.4 billion for the first three quarters of the year, ETF net cash inflows are “on pace for the biggest year on record,” says Morgan Stanley. This would beat the $174.6 billion that poured into U.S.-listed ETFs in 2008.

Investors made a big switch to risk as ETFs following U.S. large-cap indices received $11.0 billion, the largest net cash inflows for the quarter, compared with $8.1 billion for fixed income ETFs. This was a big change from the previous quarter when fixed income ETFs received about $19 billion. ETFs tracking high-yield corporate bonds topped the fixed-income segment with inflows of $4.4 billion, according to Morgan Stanley.

With 20 new ETFs launched in the third quarter, and another 11 in October, the number of ETFs stands at the extremely cool total of 1,234. Total assets in the U.S. ETF market, as of Oct. 25, were $1.3 trillion, a 21% increase since the beginning of the year.

The top three funds in terms of net cash inflows were the SPDR S&P 500 ETF (SPY), with net inflows of $7.4 billion, the SPDR Gold Trust (GLD), with $4.1 billion, and the Vanguard MSCI Emerging Markets ETF (VWO), with $3.9 billion, according to Morgan Stanley. Currency ETFs experienced the largest net cash outflows for the quarter, at $71 million. For the first nine months of the year, currency ETFs have seen outflows of $2.0 million. Most of the outflows came from ETFs bullish on the U.S. dollar, while most of the inflows went into funds bullish on the euro vs. the dollar.

Blackrock continues to be the market leader with 280 U.S.-listed ETFs and $528.4 billion in assets. This accounts for a 41.7% share of the market, says Morgan Stanley, down from 48% at the end of 2008. State Street Global Advisors, with $235.8 billion in 116 ETFs holds 18.6% of the market, down from 27% at the end of 2008. Vanguard had $231.6 billion in 65 ETFs, giving it a market share of 18.3%, up from 8% at the end of 2008. Through the first three quarters of the year, Vanguard has had net cash inflows of $41.2 billion, the most of any provider, says Morgan.

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ETFs to Buy on Outcome of Election

Election season always brings out investment professionals offering advice on how to best invest for both a Republican and Democratic outcome.

SPDR University, the ETF information arm of State Street Global Advisors, released a report yesterday, Election 2012: A Time of Polarizing Politics & Heightened Uncertainty, outlining the best ETFs to hold depending on who you think will win. Written by David Mazza, State Street’s head of ETF investment strategy, it’s no surprise that all the recommended funds comes from SPDR.

In this low interest rate environment, high yielding equities have been a favorite among investors. Under a Mitt Romney win, Mazza expects favorable tax treatment for dividends to continue, thus companies that pay dividends would be big beneficiaries. Certain sectors and industries would also benefit under a Romney administration. Increased domestic production would help the energy sector, while less regulation would boost the metals and mining sector. A less restrictive tax environment would help the transportation industry and an increase, or at least few cuts, in defense spending would help the aerospace and defense sector.

The ETFs SPDR suggests for a Romney win:

SPDR S&P® Dividend ETF (SDY)
Utilities Select Sector SPDR Fund (XLU)
SPDR S&P Telecom ETF (XTL)
Energy Select Sector SPDR Fund (XLE)
SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
SPDR S&P Metals and Mining ETF (XME)
SPDR S&P Transportation ETF (XTN)
SPDR S&P Aerospace & Defense ETF (XAR)

Under another four years of President Obama taxes are likely to rise. Mazza suggests municipal bonds to investors in higher tax brackets. If taxes rise on dividends, REITs would offer a better choice for investors seeking income. However, increased government spending could spark a rally in the infrastructure sector. The healthcare industry should also “react favorably” to the president’s reelection.

The ETFs SPDR suggests for an Obama win:
SPDR Nuveen Barclays Capital Short Term Municipal Bond ETF (SHM)
SPDR Nuveen Barclays Capital Municipal Bond ETF (TFI)
SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB)
SPDR Dow Jones REIT ETF (RWR)
SPDR FTSE/Macquarie Global Infrastructure 100 ETF (GII)
Health Care Select Sector SPDR Fund (XLV)
SPDR S&P Health Care Services ETF (XHS)
SPDR S&P Biotech ETF (XBI)

Should the political paralysis that has gripped Washington over the past two years continue in the future, preventing major changes, Mazza suggests non-dollar denominated assets and those with low to no correlation to dollar-denominated assets. This could lead to a broad move away from U.S. assets to those in high growth emerging markets. For those looking to invest in local currencies, he suggests non-US fixed income. Gold would continue to rise if countries continue to devalue their currencies to boost exports or the U.S faces another debt crisis. And with increased government spending leading to a long-term inflationary environment, assets with a real return should rally.

The ETFs SPDR suggests for an political paralysis:

SPDR Barclays Capital Emerging Markets Local Bond ETF
(EBND)
SPDR Gold Trust (GLD)
SPDR SSgA Multi-Asset Real Return ETF (RLY)