Gold ETF Saw $3 Billion Outflow In First Quarter 2011

Precious-metals prices are surging, but investors pulled about $3 billion from the largest gold exchange traded fund (GLD) in the first quarter, research shows.
(chart: 1-year GLD)

Overall, flows into ETFs were steady in the first quarter despite the ups and downs of market sentiment.

For the first quarter of 2011, inflows into U.S. ETFs were modestly positive, according to CovergEx , with $27.7 billion added to U.S.-listed ETFs. The iShares MSCI Japan (NYSEArca: EWJ) topped the asset-gathering charts, with $2.8 billion in new capital.

Meanwhile, SPDR Gold Shares (NYSEArca: GLD) unexpectedly lost around $3 billion.

Some observers believe the capital found its way into agriculture-based ETFs like PowerShares DB Agriculture Fund (NYSEArca: DBA) and Market Vectors Agribusiness ETF (NYSEArca: MOO).

ETF investors also took out $9.3 billion from iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM) , and analysts note that the money may have flowed into the Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) and other emerging country-specific plays. Nevertheless, emerging markets have recently drawn significant investor interest, with EEM garnering around $1 billion in the last week.

The majority of funds that experienced inflows were ETFs based on passive indexing with no leverage component, with over 90% of ETF investors’ incremental capital put into these products over the last quarter.