Friday, October 25, 2013

Psst, The Great Rotation Has Already Happened in ETF's

From Barron's:

ETF Investors Now More Deeply Invested in Dividend Funds Than Treasuries
Here’s a sign of the fear of the Federal Reserve and the love for yield. ETF investors now have more money in dividend-themed funds than they do in ETFs devoted to Treasury bonds.

That’s the observation by Ned Davis Research’s Neil Leeson and Wenbo Zhou, who note assets invested in the group have mushroomed from $55 billion last year to just over $80 billion at last check. This coincides with a surge in investor worry that interest rates have nowhere to go but up (not to mention fear of missing out on stock-market gains).

Vanguard Dividend Appreciation (VIG), the category leader, has enjoyed $3.2 billion inflows this year, while SPDR S&P Dividend ETF (SDY) has taken in $1.2 billion. The figure for Vanguard High Dividend Yield ETF (VYM) is $1.6 billion. Data are from

Meanwhile, iShares TIPS Bond ETF (TIP) has lost $6.9 billion to outflows and funds such as iShares 3-7 Year Treasury Bond ETF (IEI) have seen several hundred million out the door....MORE