ETF Buying Patterns Highlight Safety Trade

Michael Johnston submits:The tremendous surge in ETF assets in recent years has been attributable not to equity funds, but rather to products offering exposure to other asset classes. The number of exchange-traded commodity products has surged, enabling investors to establish exposure to everything from copper to sugar through the exchange-traded structure. Another big growth area has focused around fixed income funds, as investors have become more comfortable with the idea of accessing bonds through ETFs.

The great debate over the "Great Rotation" continues to evolve on Wall Street. Today, Gerard Minack, Head of Global Developed Markets at Morgan Stanley, picked apart the thesis in his Downunder Daily note to clients. Minack thinks a big "rotation" into stocks – a continuation of the strong flows into equity funds observed in January – could conceivably occur in 2013. However, that doesn't mean stock prices will keep going up. Minack presents several reasons for skepticism.

ETF Database submits: As the ETF world continues to expand at a tremendous pace, more and more traditional mutual fund companies are expanding ETF lineups in an attempt to capture a piece of a rapidly-growing pie. Bond fund giant PIMCO was late to the ETF game, but has made quite an impact since rolling out its first exchange-traded funds just last year.

By Zvi Bar:An exchange-traded fund is an investment fund traded on a stock exchange. ETFs are something like a hybrid between a mutual fund and traditional equity shares. ETFs hold assets such as stocks, commodities, or bonds, and are designed to trade close to net asset value (NAV) over the course of the trading day, much like a common equity would.

By John Spence: Recent buying patterns in exchange traded funds show investors are pulling money from stock ETFs while committing new funds to defensive areas of the market. “Defensive flows kept receiving healthy inflows during last week as investors sail choppy seas,” Deutsche Bank said in a report sent Wednesday.

Michael Johnston submits:The latest ETF industry data from the National Stock Exchange is out, and after a small step back in May, exchange-traded products resumed their upward trajectory in June. Total ETP inflows totaled more than $8 billion last month, after May saw about $800 million in outflows -- attributable in large part to big outflows from the S&P 500 SPDR (SPY).

George Spritzer submits: Many investors and their advisors spend a lot of their time on asset allocation.