1. "The ETFs specifically mentioned herein may not be recognised, authorised or otherwise registered in Singapore for retail distribution. This research is intended for general circulation only and its contents do not take into the specific investment objectives, financial situation or particular needs of any particular person. Before deciding to purchase any ETF, an investor should seek advice from a financial adviser regarding the suitability of the investment product, taking into account his specific investment objectives, financial situation and particular needs.” 2. “DBS, in publishing this research on ETFs, and DBSV in circulating the research, are not and should not be taken or considered as having made an offer, recommendation or solicitation to buy or sell the ETFs or to enter into a transaction or to participate in any particular trading or investment strategy. Any reference to any specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.” sa: JG, PY DBS Group Research. Equity 23 Oct 2017 Global ETF Strategy Weekly Global ETF Commentary Refer to important disclosures at the end of this report Regional Research Team equityresearch@ dbs.com Key Global Market Indicators KEY GLOBAL MARKET INDICATORS As of October 20, 2017 Value/Price Wk Chg % YTD Chg % MARKETS MSCI WORLD 2,035.58 1.07 16.24 MSCI EAFE 1997.74 -1.49 18.63 MSCI Emerging Markets 1,119.69 -0.55 29.85 USA: Dow Jones Industrial 23,328.63 2.00 18.04 S&P 500 2,575.21 0.86 15.02 NASDAQ 6,629.06 0.35 23.15 EUROPE-Euro Stoxx 50 3,605.09 0.01 9.56 CHINA-Shanghai SE 3,378.65 -0.35 8.86 JAPAN-Nikkei 225 21,467.64 1.48 12.31 SINGAPORE 3,340.73 0.65 15.97 CURRENCIES US DOLLAR INDEX (DXY) 93.7010 0.66 -8.33 USD/CNY 6.6205 0.62 -4.67 EUR/USD 1.1784 -0.30 12.05 USD/JPY 113.5200 1.52 -2.94 USD/SGD 1.3613 0.90 -5.91 COMMODITIES GOLD per oz. 1,280.47 -1.79 11.59 OIL per bbl. WTI 51.84 0.76 -3.50 BONDS Wk bp Chg YTD bp Chg US Treas 10-Yr Gov't Yld 2.3845 11.15 -5.98 US Treas 2-Yr Gov't Yld 1.5763 8.34 38.80 China Gov’t 10-yr Yld 3.7490 5.60 67.80 JGB 10-yr yield 0.750 1.10 2.90 Germ Bund 10-yr yield 0.4520 4.90 24.70 % Change in MSCI Indices 10/13/2017 to 10/20/2017 (in US Dollars) Source: ETF Asia Analytics, Inc., Bloomberg Finance L.P., MSCI, as of October 20, 2017 corporate debt could in the future lead to a collapse in asset prices after an extended period of economic growth. • At the 19th Communist Party Congress, President Xi Jinping talked about the challenges and uncertainties currently facing the world and the need for China to continue its economic Weekly Global Market Wrap The US stock markets continue its winning ways with synchronized global economic growth and more recently, the rising expectation of the passage of the US tax reform program. With the passage by the US Senate Republicans of the fiscal 2018 budget last Thursday which included a tax cut resolution of $1.5 trillion over ten years can now be fast-tracked with a simple majority i.e., without the any vote from the Democrats. The Dow Jones Industrial Average (DJIA) was up 2.0% for the week. Note that last Thursday was the 30th anniversary of the 23% decline in the DJIA. • The S&P 500 earnings are expected to be negatively affected by the impact from the hurricanes in the third quarter but should rebound later in the year. Based on 2018 consensus earnings of $145.44, up from $130.46 of the current year, the market has a price earnings ratio of 17.7 times 2018 earnings and a current earnings yield of 5.06%. Investors appear to be paying less attention to geopolitical risks and more on earnings growth while anticipating improvement in profitability from corporate tax reduction. Markets are moving forward even with the elevated market valuation based on historical standards. • The US budget deficit for the September fiscal 2017 was at $665.7 billion which was the largest since 2013, up 13.7% from fiscal 2016. The current Congress does not seem to be as concerned about the government deficit compared with the fiscal hawks of the previous administration. • China’s third quarter GDP was 6.8%, down slightly from the second quarter expansion with industrial production and retail sales growing more than anticipated. The growth was boosted by strong bank lending, exports and government spending. Bank of China governor Zhou Xiaochuan estimates second half 2017 growth at 7.0%, Final consumption accounted for 64.5% of GDP growth during the first three quarters of the year. He did warn about the risk of excessive optimism and commented that ever rising
Transcript
1. "The ETFs specifically mentioned herein may not be recognised, authorised or otherwise registered in Singapore for retail distribution. This research is intended for general circulation only and its contents do not take into the specific investment objectives, financial situation or particular needs of any particular person. Before deciding to purchase any ETF, an investor should seek advice from a financial adviser regarding the suitability of the investment product, taking into account his specific investment objectives, financial situation and particular needs.”
2. “DBS, in publishing this research on ETFs, and DBSV in circulating the research, are not and should not be taken or considered as having made an offer, recommendation or solicitation to buy or sell the ETFs or to enter into a transaction or to participate in any particular trading or investment strategy. Any reference to any specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.”
sa: JG, PY
DBS Group Research. Equity 23 Oct 2017
Global ETF Strategy
Weekly Global ETF Commentary Refer to important disclosures at the end of this report
Regional Research Team equityresearch@ dbs.com
Key Global Market Indicators
KEY GLOBAL MARKET INDICATORS As of October 20, 2017
Value/Price Wk Chg % YTD Chg % MARKETS
MSCI WORLD 2,035.58 1.07 16.24 MSCI EAFE 1997.74 -1.49 18.63 MSCI Emerging Markets 1,119.69 -0.55 29.85 USA: Dow Jones
CURRENCIES US DOLLAR INDEX (DXY) 93.7010 0.66 -8.33 USD/CNY 6.6205 0.62 -4.67 EUR/USD 1.1784 -0.30 12.05 USD/JPY 113.5200 1.52 -2.94 USD/SGD 1.3613 0.90 -5.91
COMMODITIES GOLD per oz. 1,280.47 -1.79 11.59 OIL per bbl. WTI 51.84 0.76 -3.50
BONDS Wk bp Chg YTD bp Chg US Treas 10-Yr Gov't Yld 2.3845 11.15 -5.98 US Treas 2-Yr Gov't Yld 1.5763 8.34 38.80 China Gov’t 10-yr Yld 3.7490 5.60 67.80 JGB 10-yr yield 0.750 1.10 2.90 Germ Bund 10-yr yield 0.4520 4.90 24.70
% Change in MSCI Indices 10/13/2017 to 10/20/2017 (in US Dollars) Source: ETF Asia Analytics, Inc., Bloomberg Finance L.P., MSCI, as of October 20, 2017
corporate debt could in the future lead to a collapse in asset prices after an extended period of economic growth.
• At the 19th Communist Party Congress, President Xi Jinping talked about the challenges and uncertainties currently facing the world and the need for China to continue its economic
Weekly Global Market Wrap
The US stock markets continue its winning ways with synchronized global economic growth and more recently, the rising expectation of the passage of the US tax reform program. With the passage by the US Senate Republicans of the fiscal 2018 budget last Thursday which included a tax cut resolution of $1.5 trillion over ten years can now be fast-tracked with a simple majority i.e., without the any vote from the Democrats. The Dow Jones Industrial Average (DJIA) was up 2.0% for the week. Note that last Thursday was the 30th anniversary of the 23% decline in the DJIA.
• The S&P 500 earnings are expected to be negatively affected by the impact from the hurricanes in the third quarter but should rebound later in the year. Based on 2018 consensus earnings of $145.44, up from $130.46 of the current year, the market has a price earnings ratio of 17.7 times 2018 earnings and a current earnings yield of 5.06%. Investors appear to be paying less attention to geopolitical risks and more on earnings growth while anticipating improvement in profitability from corporate tax reduction. Markets are moving forward even with the elevated market valuation based on historical standards.
• The US budget deficit for the September fiscal 2017 was at $665.7 billion which was the largest since 2013, up 13.7% from fiscal 2016. The current Congress does not seem to be as concerned about the government deficit compared with the fiscal hawks of the previous administration.
• China’s third quarter GDP was 6.8%, down slightly from the second quarter expansion with industrial production and retail sales growing more than anticipated. The growth was boosted by strong bank lending, exports and government spending. Bank of China governor Zhou Xiaochuan estimates second half 2017 growth at 7.0%, Final consumption accounted for 64.5% of GDP growth during the first three quarters of the year. He did warn about the risk of excessive optimism and commented that ever rising
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liberalization and supply-side reforms. Xi believes that his country can contribute to global development and help promote the international order. He believes in a strong role for the party in the economy and is optimistic about the country’s economic future which he thinks can be a wealthy and powerful socialist country by the middle of the century. Xi’s “socialist thoughts with Chinese characteristics in the new era” will be inscribed in the constitution without attaching his name.
• Japan’s election last Sunday is expected to have given Prime Minister Shinzo Abe and his Liberal Democratic Party-Komeito coalition a two-thirds majority in the Lower House. Abe should remain as the Head of the LDP which should give him a third term in office and the opportunity for his government to make revisions to the country’s Pacifist constitution.
• The US Energy Information Agency reported a decline in oil inventory by 5.7 million barrels to the week ended October 13th. Gasoline inventory however rose 900,000 barrels for the period. Part of the bullishness in oil prices can be attributed to events in Kurdistan where Iraqi forces took control of some of the oil fields in Kirkuk.
• Global currencies this week featured a firmer dollar with the US Dollar Index (DXY) largely reflecting a drop in the euro. The dollar was up against the yen and the Chinese yuan. US developments regarding tax reforms provided the dollar with fresh support. However, the issue of how the Federal Reserve will respond to fiscal stimulus remains crucial with the uncertainty surrounding the appointment of the next Chairman when Janet Yellen’s term comes up for renewal in February. Many market participants are still skeptical when the tax reform program will be delivered.
• The US government bonds sent the 10-year Treasury yields up to 2.38455% up 11.15 bps - the highest yield since July. The policy sensitive two-year Treasury yield rose by 8.43 bps to 1.5763%. The 10-year German government bund was up 4.90 bps to 0.4520% while the Japanese JGB 10-year bond yield was up 1.10 bps to 0.0750% while the Chinese government 10-year yield was up 5.60 bps to 3.7490%. As the stock market streaks to record highs and interest rates have climbed, bond prices have dipped while the Federal Reserve is expected to bring rates up. Yet money has been flowing into bonds at a record pace. The reality for investors is that the search for yield is on-going in a world that is living in a low interest rate environment. We favor TIPS for the long run.
FOOD FOR THOUGHT: ACT ON YOUR PLANS
All decisions involve some risk and attempting to eliminate all risk poses a new one: inertia. In today’s fast changing world, nothing stands still for long. The most thoroughly researched plans may become particularly obsolete the moment they are launched. Like a guided missile fired in the general direction, they require mid-corrections as feedback is received. Once you’ve defined your target, calculate your risks, build into your plan a feedback mechanism and launch it. It is possible to become so engrossed in the planning process that you lose sight of the fact that the real test of your plans is results. If all your plans were laid end to end, they would not reach a decision, only you can do that. Analysis may lead to paralysis. In order to succeed, only you can take action and bring your plans to life. Remember the words of Thomas Henry Huxley;
“The great end of life is not knowledge but action.”
WEEKLY INVESTMENT FOCUS: STAY IN JAPAN
Yesterday, October 22nd, Japanese Prime Minister Shinzo Abe’s ruling Liberal Democratic Party (LDP) Coalition had a resounding victory with two-thirds of the super majority and has become the longest serving Prime Minister. This political outcome supports our positive view on Japan as well with its strong performance driven by its economic recovery, its positive earnings growth and Abe’s program of economic reform and corporate restructuring.
Why Invest in Japan:
• Japan, the world’s third largest economy finds its sweet spot with the latest second quarter GDP growth enjoying the fastest pace in two years at 2.5% as consumer and capital expenditures surged up, thanks to rising exports driven by other Asian countries and investment boosted as per capita growth has accelerated. This pace marks the longest economic expansion in a decade with 2017 GDP growth of 1.7-2%.
• Challenges remains; Abe’s unfinished business with his third arrow reform, labor market conditions are tight while wages remain sluggish, government revenue has not kept us with spending, the demographic challenge of aging and continuing battle with deflation as consumer price inflation remains below 2% and widening productivity gap between manufacturing and services.
• The Japanese market has seen the longest winning streak since 1989. In this process, the market reached its highest level at 21,457 last seen October 1996. Many market participants were in the defensive mode prior to the elections as Japanese equity funds and ETFs experienced outflows.
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• What Next? We believe the Japanese market is still poised to perform given these positive factors:
1. Improving steady growth supported by global growth and an accommodative mix of fiscal policy, supportive BOJ policy and domestic investor buying
2. Positive momentum of corporate earnings growth amid the stable yen outlook
3. Shareholder-friendly corporate behavior with rising dividends and buyback stream
4. Aggressive purchases of the BOJ on the size of their ETFs which tracks the Nikkei 400 index and the Government pension investment fund (GPIF)
5. Japan's Nikkei 225 index has price earnings ratio of 15 times based on market cap and 19 times based on index weight
6. Risks factors: Strength in the yen could undermine Japan's competitiveness, cost push inflation from labor market and the geopolitical uncertainties from N. Korea.
ETF’s have proved an effective way to more broadly cover the market in Japan. Consider these Japan ETFs
Symbol Japan ETFs Price($) Assets ($mm) Exp.Ratio (%) YTD % Rtn
EWJ iShares MSCI Japan 57.52 16745 0.48 18.48
DXJ Wisdom Tree Japan Hedged Equity 56.74 8529 0.49 16.48
DBJP DB X-Trackers MSCI Japan Hedged Equity Fund 42.22 1697 0.45 16.03
SCJ iShares MSCI Japan Small Cap ETF 74.85 216 0.49 22.62
SPDR Dow Jones DIA 1.9 Sprott Gold Miners SGDM -3.1
VG Financials VFH 1.9 IP VIX M ETN VXZ -3.0
Source: IBD October 20, 2017
• The top ten winners as shown in the table were led by the VS Inverse VIX Short Term (XIV), Pro Shares Short VIX ST Futures (SVXY) and iShares Dj Home Construction. The balance came from four financial ETFs, SPDR KBW Bank (KBE), SPDR KBW Regional Bank (KRE), SPDR Financial (XLF), one health care ETF, First Trust Health Care Alpha (FXH) , SPDR S&P Homebuilders (XHB) and SPDR Dow Jones (DJA). The leadership in sectors like financials and housing and continues to evolve.
• This Week's Losers were led by SPDR S&P Oil and Gas Equipment (XES), HT Oil Service (OIH) and Pro Share VIX ST Futures (VIXY). The balance of the losers came from two volatility ETFs, IP VIX S ETN (VXX) and IP VIX M ETN (VXZ), two gold miners ETFs, VV Jr. Gold Mine (GDXY), Sprott Gold Miners (SGDM) and three MLP ETFs, Alerian MLP (AMLP), UBS Etrc ALRN MLP Infrastructure (MLP) and JP Morgan Alerian ETN (AMJ).
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Performance of Selected Key ETFs
Name Ticker Price
10/20/2017 Weekly % Chg
YTD % Chg
STOCK MARKET ETFs
SPDR S&P 500 ETF Trust SPY 257.11 0.85 16.66
iShares MSCI All Country World Index ETF ACWI 70.32 0.46 20.17
iShares MSCI EAFE ETF EFA 69.34 -0.33 22.07
PowerShares QQQ Trust Series 1 QQQ 148.71 0.25 26.40
iShares iBoxx High Yield Corporate Bond HYG 88.69 0.52 6.46
iShares TIPS Bond TIP 113.41 -0.63 1.53
INTERNATIONAL ETFs
iShares China Large-Cap FXI 46.14 -0.19 33.52
iShares MSCI Japan EWJ 57.52 0.24 18.48
iShares MSCI india INDA 34.30 -0.92 28.43
iShares MSCI Germany EWG 32.63 -0.64 25.62
iShares MSCI United Kingdom EWU 34.98 -1.05 16.54
iShares MSCI Brazil Capped EWZ 48.26 11.35 27.82
Van Eck Vectors Russia RSX 22.14 -1.86 4.34
COMMODITIES
SPDR Gold Shares GLD 121.61 -1.78 10.95
United States Oil Fund LP USO 10.43 0.58 -11.01
iPath Bloomberg Copper Sub-index Total Return JJC 36.22 1.34 25.90
Source: ETFAA, Bloomberg Finance L.P. October 20, 2017
Wall Street made headlines this week as the Dow Jones Industrial Average hit above the 23,000 milestone for the first time and marked the most records in a year for the index since l995 and since March 2009 to become the longest bull market in history. The Dow Jones Industrial Average gains were led by IBM (IBM), Johnson and Johnson (JNJ) and United Health (UNH) as they reported earnings and sales growth beating expectations. For the week, the S&P 500 and Nasdaq gained as the Senate took the first step toward tax reform.
The tax changes could make riskier investments such as stocks more attractive than bonds. Earnings have largely driven the US equities for the week. Of the S&P 500 companies that have reported earnings so far, three quarters have beat estimates, according to Fact Set. The US Treasuries fell and the dollar was firmer. Across the Atlantic, investors focused on what’s next for Spain with the Catalonia tensions. Based on good economic news and a likely re-election of Shinzo Abe, Japan’s Nikkei 225 was up for the week, its
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highest record since 1996. China’s Shanghai Index was down as investors weigh their views on the 19th National Party Congress under President Xi. The bulk of these recent market rallies is based on global growth and earnings gains, so can we assume this trend as sustainable or is a market correction due and when? We can gain some insights from the highlights of this week’s key performance indices as follows:
• Global stock markets ETFS gained this week except for iShares MSCI EAFE (EFA) and the iShares Emerging Markets (EMM). The US stock market’s bellwether ETF, the SPDR S&P 500 ETF Trust (SPY) was up with good earnings reported by companies such as Adobe Systems (ADBE) and Pay Pal (PYPL) surging to record highs. The tech heavy laden Power Shares QQQ Trust (QQQ), iShares Russell 2000 and the iShares MSCI All Country World Index (ACWI) were all up for the week. The laggards for the week were the iShares Emerging Markets (EEM) and the iShares MSCI EAFE ETF (EFA) of developed nations in Europe and Asia and mid-caps also finished lower for the week.
• The Risk Appetite Measures for ETFs as reflected in the CBOE Volatility Index (VIX) continue to hit its low level at 9.97 to its long-term average of about 19 with the investors elevated appetite for risk assets. Power Shares S&P Low volatility (SPLV), Power Shares S&P High Beta ETF (SPHB) both gained for the week. The CBOE SKEW index (SKEW) rose while ProShares VIX ST Futures (VXX) declined. In these bullish period, investors are faced with the challenge of identifying investments that can prosper in low volatility markets and thrive well with higher volatility.
• A review of this week’s Sector Investing performance, showed positive results except for oil and gas and consumer sectors. Our list shows SPDR S&P Biotech producing the best gains of the sectors for the week with other health care ETFs (XLV) surging on upbeat earnings. The next positive ranked sector is the Financial Select SPDR (XLF) with hopes for financial reforms and rising interest rates. The Technology Sector Select SPDR ETF (XLK) continues to have a good year with key holdings propelling software ETFs. On the opposite side of the ledger, Energy Select Sector SPDR ETFs (XLE) and PowerShares Cleantech (PZD) were the laggards. We like financials, technology, energy, health care and dividend growers.
• International markets ETFS were mostly down except for Japan and iShares MSCI Brazil Capped. Among the BRIC Group, Van Eck Vectors Russia (RSX), iShares MSCI India (INDA) and China Large Capped (FXI) were all down. Investors were trying to read into the China policy moves post the Party Congress this week while Prime Minister Modi’s vision, after being in office for three and a half years is being tested with his important programs, e.g., GST. Brazil‘s iShares MSCI Brazil Capped (EWZ) was up strongly for the week as investors like the turnaround in Brazil’s economy despite the political risks that lie ahead with the unpredictable presidential elections in 2018. Both iShares MSCI Germany (EWG) with Merkel facing political blow back and iShares United Kingdom (EWU) were in negative territory after continuing warnings on Brexit by BOE Governor Mark Carney. The iShares MSCI Japan (EWJ) gained for the week. Japanese equity funds suffered record outflows during the week as traders turned defensive after stirring up prices ahead of Japan’s snap elections.
• Commodity ETFs were up this week except for gold. The SPDR Gold Shares (GLD) declined as gold prices over the past 18 months has been flat despite the extensive political risk. As global growth expectations continue on an uptrend and as China maintains its growth and demand for copper stays strong, iPath Bloomberg Copper Index (JJC) is still a good investment. Oil rebounded as a risk-on appetite is seen coming back into the financial markets. In the US, oil rigs slid for the third week while supply from Kurdistan remains uncertain and good demand is seen from the US and the rhetoric is for OPEC to extend cuts, thus oil will be going through the rebalancing process of supply and demand and the oil market is shaping up more firmly than most anticipated. The United States Oil Fund, LP (USO) is up for the week. The Exchange Traded Fund industry since it commenced in 1993 has opened new markets and asset class investments.
• The ETFs are where mutual funds were 30 years ago. Investors will be thinking more about economic trends, asset allocations, risk models and research will adapt accordingly. These changes provide an opportune time for investors to keep visiting its Global DBS ETF Recommended Universe and other related product lines to recognize the changing nature of ETFs.
The world is your oyster. Reach out to your DBS Vickers Securities Representative for consultation and advice.
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Weekly U.S. ETF Flows Summary
Highlights of the Week
• During the week of the 30th anniversary of Black Monday, Wall Street enjoyed a 'perfect week': the S&P 500 posted new closing highs on all five days. The Dow Jones Industrial Average also broke through the 23,000 milestone for the first time ever. Their weekly gains were powered by upbeat Q3 corporate earnings in financials and health care and supported by optimism on tax reform hopes.
• Net inflows into U.S.-listed ETFs continued to ascend to another record highs. U.S.-listed ETFs registered $15,244.20 million net inflows, following the previous week's $8,283.52 million net inflows, which pushed their YTD net inflows to $368.02 billion, a new annual record. The U.S. ETF market closed at $3,263.12 billion in total AUM.
• U.S. equity ETFs had the largest net inflows of $9,525.00 million, up from $1,799.22 million net inflows in the previous week.
• International equity ETFs followed with $3,454.96 million net inflows, compared to the previous week's $4,093.75 million net inflows.
• Despite the rising yield on the U.S. 10-year Treasury, U.S. fixed income ETFs garnered $1,886.09 million net inflows after $1,657.75 million net inflows in the previous week.
• International fixed income ETFs also attracted $242.04 million net inflows.
• Commodity ETFs posted $146.35 million net outflows, while leveraged ETFs had $252.11 million net inflows. Inverse ETFs had $65.32 million net outflows though.
• Asia Pacific ETFs listed in the U.S. posted $129.75million net inflows. The broad Asia Pacific ETFs also had net inflows of $6.39 million the past week.
Investors have moved money out of cash and into stocks this year amid a record run for U.S. indexes. The Dow Jones Industrial Average closed above 23,000 for the first time on Wednesday, its fourth thousand-point milestone of the year. The S&P 500, meanwhile, has set 47 closing records in 2017 as investors cheer global growth prospects and stronger corporate earnings.
• This month, however, the average daily trading volume across the NYSE, Nasdaq, NYSE American and NYSE Arca has fallen roughly 12% relative to this year's average and is down by around 22% from the average in 2016.
Trading in ETFs has also dropped off, with average daily volume for U.S. ETFs down 8.5% from a year ago.
• Among individual ETFs, the broad SPDR S&P 500 ETF Trust (SPY) led the past week's net inflows with $4,150.64 million. But even as its AUM reached new milestones, eclipsing $250 billion, SPY still has YTD net outflows totaling $6,663.57 million, while its lower-cost rival, the iShares Core S&P 500 ETF (IVV) recorded the largest YTD net inflows of $25,504.22 million.
• The Vanguard S&P 500 ETF (VOO) garnered $341.28 million net inflows the past week, while the iShares Core S&P 500 ETF (IVV) had net inflows of $333.70 million. Meanwhile, the Financial Select Sector SPDR Fund (XLF) and the Industrial Select Sector SPDR Fund (XLI) continued to see favor with net inflows of $371.51 million and $357.07 million, respectively.
• In the fixed income space, the iShares Core U.S. Aggregate Bond ETF (AGG) took in $613.69 million worth of net new assets. At the same time, the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) showed $460.72 million net inflows over the same period.
• As investors continued to shift away from the U.S. equities into the non-U.S. equities, other notable asset gainers included the iShares Core MSCI Emerging Markets ETF (IEMG) with $572.12 million net inflows the past week, which brought its YTD net inflows to $15,001.55 million. The iShares Core MSCI EAFE ETF (IEFA) had net inflows of $453.87 million, bringing its YTD net inflows to $18,602.34 million, the second largest among U.S.-listed ETFs. The iShares MSCI Emerging Markets ETF (EEM) also registered $418.35 million net inflows the past week.
• On the other side of the ledger, the PowerShares QQQ Trust (QQQ) had the largest net outflows the past week with $334.28 million net outflows. The iShares NASDAQ Biotechnology ETF (IBB) faced redemptions worth of $308.38 million, while the Vanguard Extended Market ETF (VXF) showed net outflows of $108.14 million.
• During the past week, a group of U.S. fixed income ETFs experienced redemptions amid the market expectations of the Fed's rate hikes in December. The iShares 3-7 Year Treasury Bond ETF (IEI) had net outflows of $308.38 million, while the iShares 20+ Year Treasury Bond ETF (TLT) registered net outflows of $188.77 million. The iShares TIPS Bond ETF (TIP) and the iShares 7-10 Year Treasury Bond ETF (IEF) saw net outflows of $136.25 million and $85.32 million each. The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) also faced $246.68 million net outflows the past week.
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• In the commodity space, a noteworthy asset loser of the past week included the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) with $89.36 million net outflows. The iShares Silver Trust (SLV) also had net outflows of $76.10 million over the same period.
• During the week ended October 19th, the Asia Pacific ETFs listed in the U.S. posted net inflows of $129.75 million, down from $212.20 million net inflows during the previous week. The broad Asia Pacific ETFs continued to register net inflows of $6.39 million following the previous week's $53.06 million net inflows.
• Japan showed the largest net inflows again with $78.60 million, following the previous week's $97.39 million net inflows. China followed with net inflows of $51.24 million compared to $36.06 million net inflows the previous week. Pakistan and Korea had net inflows of $4.17 million and $2.80 million each over the same period.
• Meanwhile, India had the largest net outflows of $8.05 million. Indonesia also recorded $5.40 million net outflows the past week.
• In terms of individual ETFs, a group of Japan ETFs saw demand the past week. The WisdomTree Japan Hedged Equity Fund (DXJ) led the inflows with $28.07 million, while the iShares Currency Hedged MSCI Japan ETF (HEWJ) and the WisdomTree Japan Hedged SmallCap
Equity Fund (DXJS) registered net inflows of $14.25 million and $12.97 million each, representing 8.58% of its AUM. The Deutsche X-trackers MSCI Japan Hedged Equity Fund (DBJP) also had $12.41 million net inflows over the same period.
• Meanwhile, China-focused ETFs posted positive net inflows the past week. The Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) saw favor with $22.56 million net inflows. The Guggenheim China Technology ETF (CQQQ) had net inflows of $9.06 million, while the KraneShares Bosera MSCI China A Share ETF (KBA) also showed net inflows of $6.76 million.
• On the other side, the Direxion Daily India Bull 3x Shares (INDL) had net outflows of $9.03 million, or 7.36% of its AUM. The iShares MSCI Indonesia ETF (EIDO) also posted $5.40 net outflows for the past week.
• As of the week ended October 19th, 2017, the U.S. ETF market had 2,041 ETPs from 117 fund sponsors and 139 index providers listed on 4 exchanges. The number of ETFs has decreased 0.1% YTD with 190 new funds launched and 125 delisted. Total ETF assets stood at $3,263.12 billion, which have risen by 27.54% YTD, an increase of $704.54 billion. Net inflows were $368.02 billion. The average daily trading volume has decreased by 8.5% to $66.33 billion as compared to the same period last year.
Weekly Flows of Selected Asia-Focused ETFs Listed in U.S.*
Ticker Name Net Flows
($mm) AUM
($mm) AUM
%Change Weekly
Perform% DXJ WisdomTree Japan Hedged Equity Fund 28.07 8,532.85 0.33% 1.32%
ASHR Deutsche X-trackers Harvest CSI 300 China A-Shares Fund 22.56 662.22 3.53% -0.89%
Source: ETFAA, FactSet via ETF.com, XTF.com * For the week ended October 19th, 2017
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Weekly Flows By Asset Class*
Asset Class Net Flows ($mm) AUM ($mm) % of AUM
U.S. Equity 9,525.00 1,794,381.50 0.53%
International Equity 3,454.96 761,201.80 0.45%
U.S. Fixed Income 1,886.09 523,199.42 0.36%
International Fixed Income 242.04 56,727.92 0.43%
Commodities -146.35 66,015.26 -0.22%
Currency -15.29 1,324.59 -1.15%
Leveraged 252.11 30,500.73 0.83%
Inverse -65.32 17,094.22 -0.38%
Asset Allocation 32.75 8,584.35 0.38%
Alternatives 78.21 4,088.80 1.91%
Total: 15,244.20 3,263,118.59 0.47%
Source: ETFAA, FactSet via ETF.com, XTF.com* For the week ended October 19th, 2017
Weekly Flows in 2H 2017 by Asset Class
Source: ETFAA, FactSet via ETF.com, XTF.com * For the week ended October 19th, 2017
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Cumulative Weekly ETF Flows YTD by Asset Class*
Source: ETFAA, ETF.com, XTF.com, EFTdb.com * For the week ended October 19th, 2017
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Completed Date: 23 Oct 2017 14:28:15 (SGT) Dissemination Date: 23 Oct 2017 17:53:23 (SGT)
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