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ETF Flows Reveal Shifting Sentiment

NEW YORK ( TheStreet) -- July experienced $13 billion of net inflows to exchange-traded funds, with iShares capturing one-third of the total, followed by State Street (STT) (SPDRs), Vanguard, Invesco/PowerShares and U.S. Commodity Funds. Direxion led the list of firms seeing net outflows (almost $0.9 billion), with ProShares close behind.

Among individual ETFs, the SPDR S&P 500 (SPY) gained the most assets, $3 billion, although year to date, the fund has seen $27 billion leave. Next was U.S. Natural Gas (UNG), which saw $1.2 billion in net inflows. Other ETFs with large inflows included iShares Russell 2000 (IWM), PowerShares QQQ (QQQQ), Vanguard Emerging Markets Stock ETF (VWO) and SPDR Technology (XLK).

Outflow leaders were iShares S&P 500 (IVV) and SPDR Gold Shares (GLD). Both saw $1.5 billion exit. Direxion Daily Financial Bull 3X (FAS) saw $1 billion leave, almost 60% of total assets from June. Volume was still enormous in FAS -- more than $37 billion worth of shares changed hands in July. Other ETFs seeing large outflows were iShares MSCI Brazil (EWZ), ProShares Ultra S&P 500 (SSO) and ProShares Ultra Financials (UYG).

Last month we saw a potential shift from iShares MSCI Emerging Markets (EEM) to Vanguard Emerging Market Stock ETF. This month it appears investors shifted from iShares S&P 500 Index to SPDR S&P 500. There was a difference in fees between EEM and VWO, but IVV is actually the cheaper of the S&P 500 Index ETFs, with 0.09% in expenses vs. 0.0945% for SPY. It is also possible that large institutions making allocation decisions account for the one-time shifts.

Outflows from the gold ETF were a sign of reduced fear, as safe-haven investors likely migrated from gold into equities or debt. U.S. Natural Gas remains very popular with investors, despite its shortcomings and despite futures ETFS coming under fire.
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