According to Morningstar’s latest data, total net assets for U.S. ETFs closed out July at $838.4 billion, a 6%-hike over June. Total assets are also up 6% from the start of the year, and 29% higher than a year ago.
As goes SPDR Gold Shares GLD, so go the overall flows for commodity ETFs, Morningstar said. The asset class experienced its first month of net outflows since February 2010, as investors yanked a whopping $1.4 billion out of GLD in July. It wasn’t such a dull month, however, for GLD’s main rival, iShares COMEX Gold Trust IAU, which just slashed its expense ratio to 0.25% and underwent a 10-1 reverse split. On the heels of those moves, along with a meaningful increase in marketing activity, IAU bucked GLD’s trend and attracted $208.7 million in net inflows last month.
The persistent state of contango in the energy markets continues to drive investors out of futures-based funds such as United States Oil USO and United States Natural Gas UNG, Morningstar said. In July, USO saw net outflows of $152 million, while UNG saw an additional $110 million head for the exits. Since the beginning of the year, UNG and USO have shed $843.4 million and $475.2 million, respectively.
Meanwhile, according to the data, investors continued to flock to fixed-income ETFs in July, but the exposure being targeted has shifted from the short end of the yield curve to the longer end. As deflation has crept back onto investor radar screens, Morningstar said investors look to extend the durations of their bond allocations. In July, ETFs within the long government and long-term bond Morningstar categories saw combined total net inflows of $1.1 billion. On the flip side, short government and short-term bond ETFs experienced total net outflows of $445.6 million.
Also, in the current low interest-rate environment, many investors stepped out on the risk spectrum to capture some extra yield. Morningstar data showed high-yield bond was the most popular Morningstar category within the taxable-bond asset class, led by SPDR Barclays Capital High Yield Bond JNK and iShares iBoxx $ High Yield Corporate Bond HYG, which had inflows of $555 million and $355.7 million in July, respectfully.
As a whole, ETFs in the large-blend Morningstar category experienced $3.4 billion in net outflows in July. On the other side of the spectrum, the small-blend category fared well last month, as investors poured $2.3 billion into iShares Russell 2000 Index IWM.
The full Morningstar report is at http://corporate.morningstar.com/julyflows10/OE_ETF_AUG2010.pdf.