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 | Asset Flows Monitor June 2022 Edition |
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| Posted Under: ETFs |
Asset Flows Monitor June 2022 Edition
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Net inflows for US-listed ETFs totaled $62.8 billion in May, bringing total ETF assets under management to $6.6 trillion.
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Equity ETFs had net inflows totaling $32.2 billion in May, bringing trailing 12-month (TTM) net inflows to $517.1 billion.
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Fixed income ETFs had net inflows totaling $33.7 billion in May, bringing TTM net inflows to $183.8 billion.
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Commodities ETFs had net outflows totaling $3.6 billion in May, bringing TTM net inflows to $12.9 billion. Precious metals ETFs (-$2.5 billion) and Broad Commodities ETFs (-$1.0 billion) were the weakest sub-categories in May.
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| | Heightened Volatility Yields a Resurgence for Dividend ETFs |
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| Posted Under: ETFs |
Dividend ETFs seem to have grown in popularity, with net inflows totaling $17.0 billion over the past 3 months and $44.5 billion over the past 12 months, as of 4/29/22. In April, while equity ETFs overall endured $5.9 billion of net outflows, dividend ETFs reported net inflows totaling $7.8 billion (Source: FactSet). The increase in demand for dividend ETFs can partly be attributed to the strong relative performance many of these ETFs have provided this year. We expect demand to remain robust for those investors seeking exposure to higher quality stocks, alternative sources of income, and potential dividend growth. To achieve these ends, dividend ETFs employ a variety of strategies. In this piece, we provide a brief overview of four of our dividend ETFs, highlighting some of the key differences between each approach.
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| | Asset Flows Monitor May 2022 Edition |
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| Posted Under: ETFs |
Asset Flows Monitor May 2022 Edition
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Net inflows for US-listed ETFs totaled $9.3 billion in April, bringing total ETF assets under management to $6.6 trillion.
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Equity ETFs had net outflows totaling $5.9 billion in April, bringing trailing 12-months (TTM) net inflows to $533.7 billion.
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Fixed income ETFs had net inflows totaling $12.2 billion in April, bringing TTM net inflows to $169.2 billion.
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Commodities ETFs had net inflows totaling $2.4 billion in April, bringing TTM net inflows to $22.1 billion. Precious metals ETFs (+$1.6 billion) and Broad Commodities ETFs (+$1.1 billion) were the strongest sub-categories in April.
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| | Alternatives Update 1st Quarter 2022 |
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| Posted Under: Alternatives |
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The first quarter of 2022 saw no abatement in soaring inflation whether one focused on the Producer Price Index ("PPI") or the Consumer Price Index ("CPI"). This sent financial professionals delving into the 1970s and the 1940s looking for similar regimes and hints of potential outcomes. The global commodity chain, already under pressure from COVID disruptions and years of underinvestment, was thrown into near disarray when Russia invaded Ukraine. Both countries are critical exporters of agricultural products and Russia is one of the world's top energy producers.
The Federal Reserve ("Fed") raised the Federal Funds target by 25 basis point ("bps"), the first increase since 2018. Governors are now messaging a far more hawkish tone, promising a series of rate hikes and a potentially aggressive runoff of the balance sheet (Quantitative Tightening). This of course begs several questions. How far will the Fed actually go? Will they relent if the economy slows? Will they pause if there is a rapid depreciation of financial assets? Will they go too far, committing financial exsanguination and a deep recession? With estimates for 1st quarter GDP hovering in the 2% or lower range, year-over-year ("YoY") CPI estimates near 8%, and a sampling of price changes not indicating much relief either YoY or compared to pre-covid levels, something of a stagflationary cycle seems to be developing. In our view, this creates a treacherous environment to be tightening financial conditions and is somewhat of a death-defying tightrope act for the Fed.
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| | Closed-end Fund Review - First Quarter 2022 |
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| Posted Under: CEFs |
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FIRST QUARTER 2022 OVERVIEW
After a year in which the average closed-end fund (CEF) returned an impressive +16.32% (https://www.ftportfolios.com/Commentary/Insights/2022/1/19/fourthquarter- 2021), many CEFs struggled during the first quarter of 2022. Indeed, the first quarter of 2022 was a challenging one for the equity and credit markets as well as for the CEF structure. Rising short- and long-term interest rates coupled with geopolitical concerns helped contribute to a difficult quarter for many asset classes in 1Q22. The total return for the average CEF was -6.99% for the quarter. It was a broad decline as equity CEFs returned -0.45%, fixed-income CEFs returned -10.51%, municipal CEFs returned -13.27% and taxable fixed-income CEFs returned -8.39%. It was a challenge to identify categories of the CEF marketplace that posted positive total returns during the first quarter but Master Limited Partnership (MLP) CEFs returned +23.25% for the quarter and commodity CEFs were also positive for the quarter gaining +10.65%.
Equity CEFs were hurt by a -4.60% total return in the S&P 500 Index as well as by a -5.44% total return in the MSCI All-Country World Ex US Index. Rising interest rates across the curve during the 1Q22 put pressure on several key credit markets as indicated by the negative total returns for many fixed-income indices. Indeed, for the 1Q22 the ICE BofA Investment Grade Corporates Index total return was -7.74%, the ICE BofA Preferreds Index returned -6.72%, the ICE BofA 7-12 Yr. Municipal Index returned -6.29%, and the ICE BofA High-Yield Bond Index returned -4.50%. The best performing of the major bond indices was the S&P/LSTA Leveraged Loan Index, posting a negative return of just -0.10% for 1Q22. (Source: Bloomberg)
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| | Asset Flows Monitor April 2022 Edition |
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| Posted Under: ETFs |
Asset Flows Monitor April 2022 Edition
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Net inflows for US-listed ETFs totaled $88.6 billion in March, bringing total ETF assets under management to $7.03 trillion.
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Equity ETFs had net inflows totaling $59.0 billion in March, bringing trailing 12-month (TTM) net inflows to $601.9 billion.
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Fixed income ETFs had net inflows totaling $19.7 billion in March, bringing TTM net inflows to $186.5 billion.
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Commodities ETFs had net inflows totaling $10.0 billion in March, bringing TTM net inflows to $18.7 billion. Precious metals ETFs (+$6.5 billion) was the strongest sub-category in March, followed by broad market commodities ETFs (+$2.4 billion).
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| | Asset Flows Monitor March 2022 Edition |
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| Posted Under: ETFs |
Asset Flows Monitor March 2022 Edition
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Net inflows for US-listed ETFs totaled $61.3 billion in February, bringing total ETF assets under management to $6.78 trillion.
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Equity ETFs had net inflows totaling $50.9 billion in February, bringing trailing 12-months (TTM) net inflows to $622.4 billion.
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Fixed income ETFs had net inflows totaling $7.8 billion in February, bringing TTM net inflows to $180.6 billion.
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Commodities ETFs had net inflows totaling $2.3 billion in February, bringing TTM net inflows to $2.4 billion. Broad market commodity ETFs (+$2.3 billion) was the strongest sub-category in February.
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| | Is it Too Late to Allocate to Commodities ETFs? |
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| Posted Under: ETFs |
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Commodity prices have been in rally mode since March of 2020. The Bloomberg Commodity Index rose by 27.1% in 2021, the strongest calendar year increase in over 20 years, and the second strongest year since the 1970s (see chart below). So far in 2022, the index is up another 15.5% (as of 2/28). However, recent gains follow a decade of dismal performance. Prior to 2021, 7 of the 10 calendar years through 2020 delivered negative returns. In our view, there are good reasons to believe that commodity prices may continue to trend higher in the months and years ahead. In the near-term, we expect inflationary pressures fueled by loose monetary policy and the recent unprecedented expansion of the money supply in the U.S. to provide a strong tailwind for commodity prices, especially if demand for goods and services rebounds with the lifting of Covid pandemic restrictions. Geopolitical tensions and the conflict between Russia and Ukraine may also play a role in raising commodity prices. Longer-term, a transition to renewable energy and electric vehicles, along with necessary investments in related infrastructure, may fuel a substantial increase in demand for certain raw materials. We believe broad commodities ETFs, such as the First Trust Global Tactical Commodity Strategy Fund (FTGC), may help investors benefit from these trends.
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| | Asset Flows Monitor February 2022 Edition |
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| Posted Under: ETFs |
Asset Flows Monitor February 2022 Edition
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Net inflows for US-listed ETFs totaled $31.0 billion in January, bringing total ETF assets under management to $6.73 trillion.
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Equity ETFs had net inflows totaling $32.8 billion in January, bringing trailing 12-months (TTM) net inflows to $649.7 billion.
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Fixed income ETFs had net outflows totaling $6.7 billion in January, bringing TTM net inflows to $180.3 billion.
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Commodities ETFs had net inflows totaling $4.6 billion in January, bringing TTM net outflows to $1.8 billion. Precious metals (+$3.1 billion) and broad commodity ETFs (+$1.6 billion) were the strongest sub-categories in January.
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| | Alternatives Update 4th Quarter 2021 |
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| Posted Under: Alternatives |
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If ever there were ever a case of the Emperor's new clothes, it was the Federal Reserve's (the "Fed") insistence for most of 2020 and 2021 that inflation was not a cause for concern. As late as November 2021, the Federal Open Market Committee's ("FOMC") official statement was still using "transitory" and sticking with the narrative that longer-term inflation expectations remained well anchored at 2 percent. After a stunning 9.6% year-over-year ("YoY") increase for the Producer Price Index ("PPI") and 6.8% YoY increase for the Consumer Price Index ("CPI") for November, the Fed admitted what the entire world knew: inflation was not transitory, a target inflation of 2% was so far in the past, one would need the soon to be decommissioned Hubble telescope to detect it and consumers were acutely feeling the pain of higher prices. The last time inflation was rising and at these levels was the 1970s, not exactly the regime any Fed governor would likely want to revisit.
The December FOMC statement, in addition to acknowledging inflation concerns, put forth further reductions in Treasury and mortgage-backed securities purchases. However, this marginally hawkish tone was accompanied by several caveats surrounding employment, general economic conditions and the continuing need to provide accommodative and supportive financial conditions. While some might consider this pivot as the harbinger of truly restrictive financial conditions, history might offer some guidance to potentially temper this perspective.
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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