D. Marie Market Extra: Big outflows from this popular fund might be sending an important message
The SPDR S&P 500 exchange-traded fund SPY, +0.18% one of the most popular ways for investors to play the U.S. equity market, saw more than $1 billion in outflows this week, the most of any ETF, according to FactSet data.
While investors pulled money amid a rocky patch for the S&P 500 SPX, +0.17% —the benchmark the fund tracks, and which is heading for its second straight weekly decline—the outflow could also point to the importance of low fees for index funds, even in an environment where major rivals only differ by a manner of basis points (each basis point equals 0.01%).
Major ETF providers announced that they were cutting fees last week, including BlackRock Inc. BLK, +1.71% a major rival to State Street Global Advisors STT, +0.68% which runs the SPDR fund. Compared with other ETFs that track the S&P 500, including the Vanguard S&P 500 ETF VOO, +0.17% and BlackRock’s iShares S&P 500 ETF IVV, +0.15% the SPDR fund is the most expensive, with an expense ratio of 0.09%. The iShares fund has an expense ratio of 0.04%, while the Vanguard fund clocks in at 0.05%.
Since the three funds track the same benchmark, and therefore deliver returns that are essentially identical, investors may be making their fund decisions primarily on fees. The iShares fund saw inflows of $791 million this week, while the Vanguard fund saw inflows of about $434 million, according to FactSet.
Outsize flows are not uncommon for the SPDR fund, which is the biggest and most widely traded ETF, with about $196 billion in assets. Still, the week’s outflows far outpaced other funds in the equity space. The fund with the second-most outflows, the iShares Russell 1000 ETF IWB, +0.15% saw $573.8 million leave this week.
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Among equity ETFs, the fund with the highest inflows this week was the iShares Russell 2000 IWM, -0.22% which saw nearly $720 million come into the fund. SPX, +0.17%
Published at Fri, 14 Oct 2016 19:03:27 +0000
