Notably, United States and China together accounted for half of the losses made last year, sparking concerns over the nearly decade-long bull run (read: Biggest ETF Stories of 2018 Worth Watching in 2019).
Despite the diminished appeal for riskier assets, overall ETFs gathered about $309 billion in 2018, per eftf.com, marking the second-largest annual inflow. U.S. equity ETFs led the way, accumulating $132.9 billion followed by inflows of $85.4 billion for U.S. fixed income ETFs and $69 billion for international equity ETFs.
International ETFs: A Sweet Spot
iShares Core MSCI EAFE ETF IEFA was the most loved ETF of 2018, pulling in nearly $20.8 billion in capital. This fund offers exposure to a broad range of companies in Europe, Australia, Asia, and the Far East. It has a Zacks ETF Rank #3 (Hold). iShares Core MSCI Emerging Markets ETF IEMG and Vanguard FTSE Developed Markets ETF (VEA – Free Report)saw inflows of $15.7 billion and $9.5 billion, respectively. While IEMG offers exposure to emerging markets, VEA targets the developed market. The duo has a Zacks ETF Rank #3.
On the other hand, iShares MSCI EAFE ETF EFA, iShares MSCI Eurozone ETF EZU and iShares MSCI Emerging Markets ETF (EEM – Free Report) saw outflows of $10.6 billion, $7 billion and $4 billion, respectively. All these funds have a Zacks ETF Rank #3 (read: 10 Most-Heavily Traded ETFs of 2018).
U.S. Equity ETFs Attracts
iShares Core S&P 500 ETF (IVV – Free Report) and Vanguard S&P 500 ETF (VOO – Free Report) have accumulated $18.5 billion and $13.9 billion, respectively. This was followed by inflows of $13.9 billion for Vanguard Total Stock Market ETF (VTI – Free Report) and $8.5 billion for Vanguard Value ETF (VTV – Free Report) . VOO and IVV have a Zacks ETF Rank #2 (Buy) while VTV has a Zacks ETF Rank #1 (Strong Buy). VTI carries a Zacks ETF Rank #3.
Fixed Income ETFs Still Gained Love
The fixed income world gained investors’ love amid persistent stock market volatility and higher yields. The 10-year Treasury yield touched its highest level since 2011, topping 3.25% in early October and then retreated below the highest level. Investors seeking protection from rising rates poured money into lower-dated bond ETFs like iShares Short Treasury Bond ETF (SHV – Free Report) , iShares 1-3 Year Treasury Bond ETF (SHY – Free Report) and SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL – Free Report) . These bond ETFs accumulated $12.7 billion, $9.3 billion and $9.3 billion, respectively. These products have a Zacks ETF Rank #4 (Sell) (read: Will 2019 See a Bull Market for Bond ETFs?).
However, rising yields and chances of further rates hike have dampened the appeal of high yield ETFs like iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD – Free Report) , SPDR Bloomberg Barclays High Yield Bond ETF (JNK – Free Report) and iShares iBoxx USD High Yield Corporate Bond ETF (HYG– Free Report) . The trio has pulled out $6.8 billion, $5.1 billion and $3.5 billion, respectively. LQD and JNK have a Zacks ETF Rank #4 (Sell) while HYG has a Zacks ETF Rank #5 (Strong Sell).
The iShares Core S&P 500 ETF (IVV) was trading at $246.69 per share on Thursday afternoon, down $5.03 (-2.00%). Year-to-date, IVV has declined -7.83%.
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