ETFs Bled $13 Billion In Outflows In June After Fed's Taper Talk Spooked Investors Across All Asset Classes

 @MalikFromLA on June 28 2013 3:34 PM
RTR33XNW
Traders work on the floor of the New York Stock Exchange as a news conference by U.S. Federal Reserve Chairman Ben Bernanke is broadcast on a screen June 20, 2012. Reuters / Brendan McDermid

Exchange traded funds (ETFs) saw almost $13 billion withdrawn in June after investors reacted to the Federal Reserve saying it's likely to trim its bond purchase program this year.

Sell-offs occurred in numerous asset categories, but the sudden run reversed the record pace ETFs were on for annual inflows to a record month of outflows.

ETFs are the types of investment fund assets that are traded on stock exchanges.

The $13 billion loss dragged the total of U.S. listed assets down about 5 percent to $1.43 trillion, according to data from IndexUniverse. The last month the U.S. ETF industry saw alarming outflows was December 2011, when investors cashed out on $20 billion.

June's activity has now left year-to-date inflows at about $71 billion. This compares to the $76 billion that ETFs took in during the first half of 2012, a year that ended at a record $188 billion. Until June, analysts were anticipating that 2013's ETFs would set a new record by year-end.

The iShares MSCI Emerging Markets Index Fund (NYSEArca:EEM) had $4.4 billion of outflow in June, according to Index Universe.

Some ETF investors were so staggered by the Fed's moves that they parked money in cash.

"I think this may not be the only outflows month in 2013, but the merits of an ETF vs. mutual fund are still there," Todd Rosenbluth, an analyst at S&P Capital IQ in New York, told IndexUniverse.

Rosenbluth anticipates that when investors return to the markets they'll still choose equity or bond ETFs over mutual funds because they're cheaper and they compare  favorably to mutual fund benchmarks.

Join the Discussion