Equity ETFs coped with increased volatility in Q1 2015
Investors inject $19.5 billion into equity ETFs in the first quarter
First quarter 2015 was marked by an increase in market volatility. The Dow Jones Industrial Average witnessed 16 triple-digit moves during the month of March — the second most of any month in history (October 2008 experienced the most). Investors were torn between the news that the European Central Bank (ECB) had finally launched its quantitative easing program — committing to buy 60 billion euros of eurozone sovereign debt each month through September 2016, with the goal of heading off deflation and propping up economic growth — and the Federal Reserve’s plans to begin hiking rates, possibly as soon as June.
Perhaps as impactful on investor psyche were the wild gyrations in oil, currency and stock prices, and of course the ever-present concern about conflicts in the Middle East.
As a result of the Fed’s ending its quantitative easing and the dollar climbing to new multiyear highs against the currencies of many U.S. trading partners, investors began to fear falling company earnings and slowing economic growth.
Equity ETFs ranked by quarterly returns
Name/ticker | 3-month return | 1-year return | Net assets ($M) | Expense rato* | 3-month average trading volume |
---|---|---|---|---|---|
Market Vectors ChinaAMC SME-ChiNext ETF (CNXT) | 49.51% | N/A | $44.9 | 0.68% | 24,680 |
Deutsche X-trackers Hvst CSI500 China A-Shs SC ETF (ASHS) | 36.43% | N/A | $43.4 | 0.80% | 24,325 |
Guggenheim Invest Solar ETF (TAN) | 29.35% | 2.6% | $369.5 | 0.71% | 226,509 |
iShares Global Clean Energy ETF (ICLN) | 22.02% | 9.1% | $80.6 | 0.48% | 53,826 |
WisdomTree Japan Hedged Health Care Fund (DXJH) | 21.84% | N/A | $3.1 | 0.43% | 3,385 |
iShares Currency Hedged MSCI Germany ETF (HEWG) | 21.35% | 23.3% | $1,326.7 | 0.53% | 650,563 |
Market Vectors Solar Energy ETF (KWT) | 20.92% | -3.3% | $24.6 | 0.66% | 1,981 |
Deutsche X-trackers MSCI Germany Hedged Equity ETF (DBGR) | 20.90% | 23.9% | $179.7 | 0.45% | 152,157 |
ALPS Medical Breakthroughs ETF (SBIO) | 20.45% | N/A | $52.2 | 0.50% | 64,015 |
WisdomTree Germany Hedged Equity Fund (DXGE) | 19.86% | 23.7% | $291.8 | 0.48% | 254,683 |
iShares Currency Hedged MSCI EMU ETF (HEZU) | 18.70% | N/A | $854.6 | 0.51% | 550,224 |
ETFis BioShares Biotechnology Products Fund (BBP) | 18.51% | N/A | $9.3 | 0.85% | 13,247 |
SPDR S&P Biotech ETF (XBI) | 18.46% | 56.6% | $2,205.7 | 0.35% | 806,094 |
WisdomTree Europe Hedged Equity Fund (HEDJ) | 18.19% | 24.0% | $17,313.8 | 0.58% | 963,782 |
ETFis BioShares Biotechnology Clinical Trials Fund (BBC) | 18.05% | N/A | $21.3 | 0.85% | 30,702 |
Deutsche X-trackers MSCI EMU Hedged Equity ETF (DBEZ) | 17.99% | N/A | $14.8 | 0.45% | 9,539 |
iShares MSCI Russia Capped ETF (ERUS) | 16.89% | -24.8% | $244.5 | 0.62% | 115,368 |
First Trust NYSE Arca Biotechnology Index Fund (FBT) | 15.97% | 54.3% | $3,174.5 | 0.60% | 248,957 |
PowerShares S&P SmallCap Health Care Port (PSCH) | 15.38% | 30.2% | $196.3 | 0.29% | 14,964 |
PowerShares Dynamic Pharmaceuticals Portfolio (PJP) | 14.88% | 38.7% | $1,939.4 | 0.58% | 211,444 |
KraneShares Bosera MSCI China A Share ETF (KBA) | 14.57% | 85.4% | $26.8 | 0.85% | 10,629 |
SPDR S&P Pharmaceuticals ETF (XPH) | 14.50% | 39.1% | $1,197.6 | 0.35% | 119,481 |
Market Vectors ChinaAMC A-Share ETF (PEK) | 14.42% | 91.0% | $108.0 | 0.72% | 60,096 |
Deutsche X-trackers Hvst CSI 300 China A-Shs ETF (ASHR) | 14.23% | 91.1% | $1,164.5 | 0.80% | 1,083,519 |
iShares US Pharmaceuticals ETF (IHE) | 14.08% | 37.6% | $1,145.6 | 0.45% | 64,068 |
iShares Nasdaq Biotechnology ETF (IBB) | 13.18% | 45.7% | $8,369.4 | 0.48% | 1,661,225 |
iShares MSCI Japan Minimum Volatility ETF (JPMV) | 13.04% | N/A | $11.3 | 0.30% | 1,877 |
Deutsche X-trackers Hvst MSCI All China Equity ETF (CN) | 12.99% | N/A | $9.7 | 0.70% | 2,463 |
Market Vectors Russia ETF (RSX) | 12.55% | -25.6% | $1,840.4 | 0.63% | 17,334,713 |
iShares US Healthcare Providers ETF (IHF) | 12.45% | 34.8% | $798.2 | 0.45% | 68,820 |
Market Vectors Biotech ETF (BBH) | 12.33% | 42.5% | $770.7 | 0.35% | 168,610 |
PowerShares DWA Healthcare Momentum Portfolio (PTH) | 12.26% | 26.3% | $220.9 | 0.60% | 30,001 |
SPDR MSCI Japan Quality Mix ETF (QJPN) | 11.70% | N/A | $6.5 | 0.30% | 814 |
AdvisorShares Gartman Gold/Euro ETF (GEUR) | 11.63% | 17.0% | $13.8 | 0.77% | 40,061 |
iShares Currency Hedged MSCI Japan ETF (HEWJ) | 11.59% | 29.9% | $329.6 | 0.48% | 376,739 |
First Trust Hong Kong AlphaDEX Fund (FHK) | 11.40% | 16.3% | $87.0 | 0.80% | 25,021 |
WisdomTree International Hedged Dividend Growth Fd (IHDG) | 11.31% | N/A | $206.5 | 0.58% | 166,344 |
First Trust Health Care AlphaDEX Fund (FXH) | 11.21% | 31.6% | $3,459.5 | 0.66% | 352,921 |
iShares MSCI Denmark Capped ETF (EDEN) | 11.21% | 5.8% | $55.2 | 0.53% | 27,452 |
First Trust Asia Pacific Ex-Japan AlphaDEX Fund (FPA) | 11.18% | 12.7% | $40.4 | 0.80% | 6,058 |
During the quarter, oil continued its slide because of surpluses of crude oil, a rising dollar and anticipation that an Iranian nuclear deal might ease some of the sanctions on the oil exporter, exacerbating the supply glut and further pressuring prices. Many foreign markets benefitted from the ECB’s easing, the weakening euro (which bodes well for foreign exporters) and lower oil prices. The Xetra DAX Total Return Index jumped 22.03%, the Shanghai Composite tacked on 15.95%, and the Nikkei 225 Total Return Index advanced 10.06% for the quarter.
With Middle East tensions on the rise and U.S. economic reports coming in lower than expected, during the month of March Treasury yields declined on all maturities above one year, with the 10-year yield dropping 6 basis points (bps) to 1.94% by month-end. The seven-year Treasury yield, declining 13 bps to 1.37%, witnessed the largest decline for March of the group.
ETF investors (authorized participants, or APs) were net purchasers of long-term assets for Q1 2015, injecting $19.5 billion into equity ETFs while also being net purchasers of taxable fixed income ETFs (+$18.4 billion) and municipal debt ETFs (+$1.2 billion). Breaking a two-quarter trend, APs were net purchasers of nondomestic equity ETFs, injecting a net $26.5 billion into the subgroup, while being net redeemers of domestic equity funds (-$9.0 billion).
Lipper’s U.S. Diversified Equity ETFs macro-group witnessed the largest net redemptions, handing back some $28.5 billion, while Emerging Markets ETFs saw the only other net redemptions among the super-groups, handing back $1.0 billion during the quarter.
Equity ETFs with the largest inflows
Name/ticker | 3-month estimated net flows ($M) | 3-month return | 1-year return | Net assets ($M) | Expense ratio* |
---|---|---|---|---|---|
WisdomTree Europe Hedged Equity Fund (HEDJ) | $10,069.2 | 18.19% | 24.01% | $17,313.8 | 0.58% |
Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF) | $5,112.2 | 10.48% | 16.72% | $7,235.5 | 0.35% |
Vanguard Total Stock Market Index Fund ETF (VTI) | $2,951.0 | 1.80% | 12.31% | $54,560.4 | 0.05% |
Vanguard 500 Index Fund;ETF (VOO) | $2,858.5 | 0.94% | 12.68% | $30,637.9 | 0.05% |
WisdomTree Japan Hedged Equity Fund (DXJ) | $2,481.8 | 10.66% | 29.31% | $15,782.5 | 0.48% |
iShares Core MSCI EAFE ETF (IEFA) | $2,003.1 | 4.99% | -1.06% | $5,418.4 | 0.12% |
iShares Currency Hedged MSCI EAFE ETF (HEFA) | $1,931.3 | 11.04% | 16.52% | $2,065.3 | 0.39% |
United States Oil Fund LP (USO) | $1,898.9 | -16.28% | -53.91% | $2,792.3 | 0.76% |
iShares MSCI EAFE ETF (EFA) | $1,813.2 | 4.85% | -1.05% | $57,579.3 | 0.33% |
iShares MSCI EMU ETF (EZU) | $1,712.5 | 5.21% | -6.24% | $9,629.5 | 0.50% |
iShares MSCI Germany ETF (EWG) | $1,711.8 | 8.19% | -2.76% | $6,667.5 | 0.51% |
Health Care Select Sector SPDR Fund (XLV) | $1,459.7 | 6.58% | 26.10% | $14,270.2 | 0.15% |
Vanguard FTSE Europe ETF (VGK) | $1,272.1 | 3.91% | -4.97% | $12,840.8 | 0.12% |
iShares MSCI India ETF (INDA) | $1,213.5 | 5.36% | 20.36% | $3,348.6 | 0.67% |
First Trust Dorsey Wright Focus 5 ETF (FV) | $1,200.0 | 9.03% | 27.39% | $2,657.8 | 0.94% |
Vanguard Mid-Cap Index Fund ETF (VO) | $1,196.9 | 4.29% | 14.87% | $11,527.1 | 0.09% |
SPDR Gold Shares (GLD) | $1,180.5 | -1.12% | -8.48% | $28,123.3 | 0.40% |
iShares Currency Hedged MSCI Germany ETF (HEWG) | $1,083.7 | 21.35% | 23.28% | $1,326.7 | 0.53% |
Deutsche X-trackers MSCI Europe Hedged Equity ETF (DBEU) | $1,080.6 | 11.14% | 14.00% | $1,922.3 | 0.45% |
iShares US Energy ETF (IYE) | $1,024.5 | -2.17% | -12.70% | $2,148.7 | 0.45% |
Developed International Markets ETFs were the top attractor of net new money, taking in $37.9 billion in Q1, followed at a distance by Multi-Cap ETFs (+$6.1 billion) and Mid-Cap ETFs (+$5.1 billion).
The two top equity ETF performers were housed in Lipper’s China Region ETFs classification. At the top of the leader board was Market Vectors ChinaAMC SME-ChiNext ETF (CNXT), returning a whopping 49.51% return for Q1. CNXT was followed by Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap ETF (ASHS), which posted a 36.43% return; Guggenheim Solar ETF (TAN), housed in Lipper’s Global Natural Resources ETFs classification), which returned 29.35% for the quarter; iShares Global Clean Energy ETF (ICLN), also warehoused in Lipper’s Global Natural Resources ETFs classification, which garnered a 22.02% return; and WisdomTree Japan Hedged Health Care Fund (DXJH), housed in Lipper’s Global Health/Biotechnology ETFs classification, which posted a 21.84% return.
It’s interesting to note that while the Health/Biotechnology ETFs classification (+12.46%) did not house any of the five top performers, it posted the strongest return of Lipper’s 87 ETF classifications, followed closely by Global Health/Biotechnology ETFs (+12.30%), Japanese ETFs (+10.53%) and China Region ETFs (+9.56%).
Equity ETFs with the largest outflows
Name/ticker | 3-month estimated net flows ($M) | 3-month return | 1-year return | Net assets ($M) | Expense ratio* |
---|---|---|---|---|---|
SPDR S&P 500 ETF Trust (SPY) | -$31,025.2 | 0.92% | 12.58% | $185,413.7 | 0.10% |
iShares MSCI Emerging Markets ETF (EEM) | -$3,263.1 | 2.01% | -0.09% | $29,572.2 | 0.67% |
PowerShares QQQ Trust Series 1 (QQQ) | -$2,698.8 | 2.57% | 21.74% | $38,600.1 | 0.20% |
Financial Select Sector SPDR Fund (XLF) | -$2,656.3 | -2.08% | 9.81% | $18,043.5 | 0.15% |
Consumer Staples Select Sector SPDR Fund (XLP) | -$1,776.6 | 1.16% | 16.37% | $8,261.8 | 0.15% |
iShares US Technology ETF (IYW) | -$1,714.2 | 0.74% | 16.72% | $3,021.3 | 0.45% |
Industrial Select Sector SPDR Fund (XLI) | -$1,391.7 | -0.89% | 8.81% | $7,763.8 | 0.15% |
iShares MSCI ACWI ETF (ACWI) | -$1,266.7 | 2.31% | 5.83% | $6,311.8 | 0.33% |
iShares US Financials ETF (IYF) | -$1,257.2 | -0.90% | 10.58% | $1,246.1 | 0.45% |
iShares US Utilities ETF (IDU) | -$1,132.0 | -4.82% | 10.83% | $687.5 | 0.45% |
SPDR Dow Jones Industrial Average ETF Trust (DIA) | -$1,130.9 | 0.29% | 10.41% | $11,942.9 | 0.16% |
iShares Core S&P 500 ETF (IVV) | -$1,102.4 | 0.94% | 12.66% | $68,888.6 | 0.07% |
PowerShares DB Commodity Index Tracking Fund (DBC) | -$783.0 | -7.20% | -34.65% | $2,991.7 | 0.89% |
iShares Transportation Average ETF (IYT) | -$660.0 | -4.18% | 16.69% | $1,473.1 | 0.45% |
Technology Select Sector SPDR Fund (XLK) | -$624.7 | 0.80% | 16.28% | $12,816.0 | 0.15% |
iShares S&P 100 ETF (OEF) | -$555.5 | -0.19% | 11.13% | $4,417.9 | 0.20% |
First Trust Utilities AlphaDEX Fund (FXU) | -$536.1 | -3.82% | 9.76% | $228.2 | 0.70% |
iShares MSCI Mexico Capped ETF (EWW) | -$531.7 | -2.61% | -7.99% | $1,708.6 | 0.50% |
Vanguard Dividend Appreciation Index Fund ETF (VIG) | -$467.1 | -0.07% | 9.53% | $20,621.8 | 0.10% |
iShares MSCI Brazil Capped ETF (EWZ) | -$464.6 | -14.69% | -28.77% | $2,987.5 | 0.61% |
With the continued strength in the U.S. dollar and with commodity prices slipping, it was not too surprising to see Commodities Agriculture ETFs (-11.04%) at the bottom of the equity ETF universe, bettered somewhat by Latin American ETFs (-9.66%), Commodities Energy ETFs (-7.93%) and Commodities General ETFs (-6.19%).
Newly-launched equity ETFs, ranked by average daily volume during Q1 2015
Name/ticker | Classification | 3-month average daily volue | Expense ratio* |
---|---|---|---|
WisdomTree Europe Hedged SmallCap Equity Fund (EUSC) | European region | 320,587 | 0.58% |
iShares Exponential Technologies ETF (XT) | Science and technology | 305,800 | 0.47% |
Lattice US Equity Strategy ETF (ROUS) | Large-cap core | 67,259 | 0.35% |
CSOP FTSE China A50 ETF (AFTY) | China region | 62,111 | 0.99% |
ETFis Tuttle Tactical Management US Core ETF (TUTT) | Multi-Cap Core | 53,439 | 1.34% |
Lattice Developed Markets (ex-US) Strategy ETF (RODM) | International Multi-Cap core | 49,198 | 0.50% |
Lattice Emerging Markets Strategy ETF (ROAM) | Emerging markets | 43,250 | 0.65% |
Fidelity MSCI Real Estate Index ETF (FREL) | Real estate | 25,016 | 0.12% |
Lattice Global Small Cap Strategy ETF (ROGS) | Global Small-/Mid-Cap | 22,569 | 0.60% |
Global X SuperDividend Emerging Markets ETF (SDEM) | Emerging markets | 16,969 | 0.65% |
Three of the five worst performing ETFs were housed in Lipper’s Latin American ETFs classification, with iShares MSCI Brazil Small-Cap ETF (EWZS) posting a 25.05% decline, the worst return of all equity ETFs for the quarter. EWZS was bettered somewhat by Market Vectors Brazil Small-Cap ETF (BRF), which lost 23.78% of its 2014 year-end value.
With the concerns about the Greek election results, which brought the leftist anti-austerity Syriza party to power, and despite the recent four-month extension for Greece’s bailout, it wasn’t a surprise to see Global X FTSE Greece 20 ETF (GREK), housed in Lipper’s Emerging Markets ETFs classification, losing 19.38% for the quarter, the third worst performance.
One-year anniversary equity ETFs, ranked by average daily volume during Q1 2015
Name/ticker | 3-month average daily volume | 3-month return | 1-year return | Net assets ($M) | Expense ratio* |
---|---|---|---|---|---|
First Trust Dorsey Wright Focus 5 ETF (FV) | 1,551,699 | 9.03% | 27.39% | $2,657.8 | 0.94% |
iShares Currency Hedged MSCI EAFE ETF (HEFA) | 1,381,560 | 11.04% | 16.52% | $2,065.3 | 0.39% |
iShares Currency Hedged MSCI Germany ETF (HEWG) | 650,563 | 21.35% | 23.28% | $1,326.7 | 0.53% |
iShares Currency Hedged MSCI Japan ETF (HEWJ) | 376,739 | 11.59% | 29.85% | $329.6 | 0.48% |
Deutsche X-trackers MSCI South Korea Hdg Eqty ETF (DBKO) | 290,297 | 4.41% | -3.40% | $189.6 | 0.58% |
First Trust RBA American Indus Renaissance ETF (AIRR) | 65,852 | 3.80% | -2.55% | $78.9 | 0.70% |
Vident Core US Equity Fund (VUSE) | 60,165 | 2.51% | 8.67% | $358.7 | 0.58% |
Cambria Global Value ETF (GVAL) | 48,781 | 1.50% | -20.48% | $74.1 | 0.69% |
Direxion Zacks MLP High Income Shares (ZMLP) | 45,777 | -1.97% | -13.65% | $84.1 | 1.63% |
AdvisorShares Gartman Gold/Euro ETF (GEUR) | 40,061 | 11.63% | 16.97% | $13.8 | 0.77% |
All data above is as of March 31. Excludes leveraged and inverse funds, and exchange traded notes. *Most recently reported net prospectus expense ratio.
Source: Lipper, a Thomson Reuters company.
Tom Roseen is head of research services at Lipper Inc.
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