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.

ETFs attracted net inflows of $358 million last week

Exchange-traded funds attracted net inflows of $358 million last week, representing two straight months of positive new money coming into the funds, according to research sent to clients Monday by Morgan Stanley Smith Barney.

Emerging markets stock funds were again strong with $1 billion. But that was offset by U.S. large-cap stock ETFs’ $2.1 billion outflows.

ETF assets stood entering today at $925 billion, up 18.5% so far this year.

During the past 13 weeks, nearly $41 billion of inflow had gone into ETFs. Of that amount, 46% went into emerging markets funds, according to MSSB’s analysts.

But the biggest gainer in terms of inflows during the week was theTechnology Select Sector SPDR (XLK).

“A number of XLK’s constituents reported earnings last week, undoubtedly leading to strong flows,” wrote Dominic Maister, lead ETF and closed-end fund analyst at the firm.

The biggest ETF by assets, the SPDR S&P 500 (SPY), had net outflows of $2.1 billion in the week.

So far this year, MSSB estimates SPY had net outflows of $7.8 billion through last week.

During the past 13-week run in ETF inflows, the analysts estimated that Vanguard Emerging Markets ETF (VWO) has collected the most new money — about $7.6 billion.