Total ETF Assets Surge Past $1 Trillion

NEW YORK (TheStreet) — As evidenced by the National Stock Exchange’s monthly fund flow data, the month of April proved to be another popular one for ETF investors. Since ETF assets initially broke through the $1 trillion mark at the start of 2011, the universe has continued to grow and expand at an impressive stride. At the close of April, total assets stood on the cusp of breaking through $1.12 trillion.

Additionally, the industry welcomed the addition of 23 new funds. This lifted the universe’s total product count to 1,030.

On top of market appreciation, strong investor inflows played a major role in boosting assets. During the opening weeks of the second quarter of 2011, the universe saw net inflows totaling more than $21 million. This represents the largest single-month inflow of the year.

Industry leaders BlackRock (BLK), SSgA, PowerShares and Vanguard led inflows, with $8.9 billion, $4.9 billion, $2.8 billion, and $2.8 billion entering, respectively. On the other side of the coin, U.S. Commodity Funds and Direxion lead the industry in outflows, respectively witnessing $820 million and $575 million head for the exits. Fixed-income giant, Pimco, was another sponsor that witnessed notable outflows. During April, more than $290 million left the firm’s products.

The bulk of Pimco’s losses can be traced back to the outflows witnessed from the fund’s active product, Pimco Enhanced Short Maturity Strategy Fund (MINT). The fund saw the universe’s fourth-largest outflows, $311 million.

While MINT’s decline was heavy, it was dwarfed by the outflows witnessed in the United States Oil Fund (USO). Despite oil’s prolonged strength, investors appeared to have used April as a time to pocket gains. During the month, over $680 million flowed out of USO.

Fellow energy-related ETFs were not immune to outflows either. Energy Select Sector SPDR (XLE), SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and fellow futures-based fund, United States Natural Gas Fund (UNG) saw heavy outflows as well, totaling $670 million, $310 million, and $187 million, respectively.

In the face of silver’s dramatic run up, the massive iShares Silver Trust (SLV) was among the list of outflow leaders, with more than $170 million exiting. Interestingly, other silver funds, including fellow bullion-backed ETFs Physical Silver Shares (SIVR), saw inflows. This divergence may be attributable to SIVR’s considerably lower expenses. While SLV charges investors 0.50%, SIVR carries a 0.30% expense ratio.


Elsewhere in the realm of precious metals ETFs, the physically based iShares Gold Trust (IAU) and SPDR Gold Shares (GLD) were notable inflow recipients. During April, the funds gathered $440 million and $890 million, respectively. The fact that GLD led its iShares competitor last month is interesting considering that, in recent months, IAU has had a jolt of popularity after reducing its costs.

Like the showdown between IAU and GLD, costs appeared to have played an insignificant role in determining investor preference for emerging market funds in April. Although both Vanguard Emerging Market ETF (VWO) and iShares MSCI Emerging Market Index Fund (EEM) saw heavy inflows, EEM, which had recently been eclipsed in size by the younger and less-expensive VWO, actually managed to gather considerably more assets in April.

These two price-war-related battles will be some of the more exiting factors to watch in the months ahead.

Broad U.S. market funds, including SPDR S&P 500 ETF (SPY) and the newly rebalanced PowerShares QQQ (QQQ), were the ETF industry’s largest inflow recipients in April. The funds gathered $2.7 billion and $2.1 billion, respectively.

Interestingly, although the heavy inflows seen in SPY, QQQ and other equity-based funds indicate that investors remain confident in the ongoing economic recovery, it is clear that concerns are still present. Despite descending to record lows in April, the iPath S&P 500 VIX Short Term Futures ETN (VXX) managed to generate some of the industry’s heaviest interest. The fund gathered more than $400 million in assets.

As I’ve explained in the past, conservative investors looking to prepare their portfolios for turmoil should avoid using VXX and other VIX-related products such as iPath S&P 500 VIX Mid Term Futures ETN (VXZ). Gold products like IAU and dividend-yielding funds such as iShares Dow Jones Select Dividend Index Fund (DVY) will be more reliable over the long run.

Once again, the NSX’s fund flow data unveiled a number of interesting developments and trends within the ETF universe. I look forward to seeing what is in store for this growing industry.

This post originally appeared at TheStreet.