The MarketsDecember 14, 2009

Taxable Bond ETFs Still King of the Hill

<p>Another strong November showing has allowed taxable bond ETFs to walk off with “most popular” honors, with $32.1 billion in net year-to-date inflows, according to Morningstar.</p>

Reported by Fred Schneyer

Within the category, broad fixed-income funds such as Vanguard Total Bond Market BND and iShares Barclays Aggregate Bond AGG saw a combined $493.9 million of net inflows, the investment research firm said.

But it was the usual suspects—TIPS and short-duration funds—that led the way for the category once again. iShares Barclays TIPS Bond TIP topped the list for this category, with $516.9 million in net inflows in November. SPDR DB International Government Inflation-Protected Bond WIP also packed on another $121.8 million in the month, the data showed.

Not only that, but investors also apparently continue to shy away from interest-rate risk while looking for a place to park their cash. For instance, Vanguard Short-Term Bond (BSV), iShares Barclays 1-3 Year Credit Bond (CSJ), PIMCO 1-3 Year US Treasury Index (TUZ), iShares Barclays Short Treasury Bond (SHV), iShares Barclays 1-3 Year Treasury Bond (SHY), and SPDR Barclays 1-3 Month T-Bill (BIL) combined saw $889.6 million in net inflows last month.

Inflows into the commodity category over the past month were led by SPDR Gold Shares (GLD), which pulled in more than $1 billion last month. In the year-to-date period, GLD alone has seen $11 billion in net inflows, or 44% of total category flows.

Investors also poured $456 million into United States Natural Gas UNG and $207.6 million into United States Oil USO, Morningstar said.

Over in the currency category, currency ETFs attracted $1.1 billion in net inflows in November ($2.3 billion year to date). At month-end, there were $6.1 billion in total net assets invested across 29 currency ETFs. Investors poured more than $670.4 million into PowerShares DB US Dollar Index Bullish (UUP).

With more than $1 billion in new assets, Vanguard Small Cap (VB) topped the inflows list for U.S. stock ETFs in November.

Investors poured another $471 million into Vanguard Small Cap Value (VBR) and Vanguard Small Cap Growth (VBK). This was interesting, considering that iShares Russell 2000 Index (IWM), iShares Russell 2000 Value Index (IWN), and iShares Russell 2000 Growth Index (IWF) saw $868.6 million in combined net outflows over the same period.

As go the SPDRs, so goes the U.S. Stock ETF category, Morningstar said. After two months of bleeding assets, the SPDRs saw $882.1 million of net inflows in November.

The research is available here.