ETF Inflows Slow, but Barclays Benefits

NEW YORK ( TheStreet) -- The ETF industry added more assets in August, but the pace of net inflows slowed from almost $13.5 billion in July to a little more than $5.5 billion.

Barclays grabbed a huge slice of the pie, with $2.2 billion in inflows, followed by $2.1 billion at Vanguard; Invesco/PowerShares and SSgA added about $1 billion each; and Direxion claimed $0.5 billion. Those numbers were mainly offset by outflows of $1.6 billion at ProShares.

The funds with the largest inflows were iShares S&P 500 ( IVV), $1 billion; iShares Russell 2000 ( IWM), $700 million; iShares Barclays TIPS ( TIP), $600 million; Vanguard REIT ( VNQ), $500 million; and SPDR S&P Energy ( XLE), $400 million.

The funds with the largest outflows were iShares FTSE/Xinhua China 25 ( FXI), $1.6 billion; iShares MSCI Emerging Markets ( EEM), $1 billion; ProShares Ultra Dow Jones Financials ( UYG), $500 million; ProShares Ultra S&P 500 ( SSO), $500 million; and SPDR S&P 500 ( SPY), $500 million.

As we saw in previous months, some of the shift in assets was between funds using very similar, if not the same, strategies. This month, funds flowed out of SPY and into IVV. While EEM lost assets, Vanguard MSCI Emerging Markets (VWO) added $200 million.

Some of the fastest-growing ETFs (inflows relative to assets) were bearish funds. Direxion Daily Small Cap Bear 3X ( TZA), which saw $381 million flow into the fund. That was more than the final assets at the end of the month, however, as rising markets ate into returns.

ETF Securities Silver ( SIVR) added $93 million in assets on top of the $4 million in July. ProShares UltraShort Silver ( ZSL) and ProShares UltraPro Short S&P 500 ( SPXU) saw rapid growth in assets as well.

Finally, PowerShares DB U.S. Dollar Bullish ( UUP) saw inflows of $173 million, bringing assets to $354 million -- still less than 50% of year ago August assets.

Some of the ETFs seeing the largest outflows as a percentage of assets included Direxion Daily Financials Bull 3X ( FAS), as investors mostly struck a bearish tone in August. SPDR S&P Retail ( XRT) saw $245 million flow out, leaving $641 million at the end of the month.

ProShares Ultra Dow Jones Oil & Gas ( DIG) saw $166 million flow out, and iShares Netherlands ( EWN) saw $26 million exit, leaving $83 million. SPDR KBW Regional Bank ( KRE) saw $86 million flow out, leaving $449 million.

The aggregate data confirms what the individual fund data shows. Long-leveraged U.S. equity saw $2.4 billion in outflows, while short leveraged saw $900 million in inflows. Long U.S. equity saw $2.7 billion in inflows.

Global and international equity funds saw $800 million in outflows, while short-leveraged funds saw $95 million in inflows.

Thanks to the assets flowing into VNQ, real estate long ETFs saw $805 million in inflows.

Aside from the short bets in U.S. and global/international equity, almost all asset classes saw inflows across the spectrum of long and short funds, as investors increased their bullish and bearish positions. The exceptions were commodity long-leveraged, with $61 million in outflows and currency short-leveraged, with $5 million in outflows.

The only asset class with net outflows was global/international, with $679 million exiting these ETFs, mainly through FXI and EEM.

Trends to watch for in September will be the flows into gold and silver ETFs after their pop at the start of the month. Based on asset appreciation alone, SPDR Gold Shares ( GLD) should have retaken its position as the second-largest ETF, behind SPY.

Also, another trend to watch is whether or not traders continue to pile into bearish ETFs as the rally grows long in the tooth and delivers more losses to the bears.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion Money Management owns iShares Barclays TIPS.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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