Here is a sign that investors want income: Exchange-traded funds that deliver cash payouts tended to dominate ETF fund flows in the second quarter of this year.
According to a report from National Bank Financial, the BMO Covered Call Canadian Banks ETF led the way, picking up $335-million in inflows. To be fair, the ETF only began trading earlier this year, which might explain part of the attraction. However, it also helped that it is yielding more than 10 per cent.
Other ETFs that attracted big inflows included the BMO S&P/TSX Equal Weight Banks ETF – a group of stocks that dividend-hungry investors often find particularly attractive, the iShares S&P/TSX Capped Composite Index ETF and a couple of Claymore bond ETFs: the Short Duration High Income ETF and the 1-5 Year Laddered Government Bond.
The Financial Times (via Abnormal Returns) ran an interesting story about exchange traded funds on Wednesday, noting how some of the smaller U.S. providers in this industry are grabbing a bigger share of inflows. The “big three” providers – BlackRock (iShares), Vanguard and State Street grabbed 56.1 per cent of all inflows in the first half of 2011, down from 72.4 per cent in the first half of last year.
For example, Van Eck’s Market Vectors agriculture ETF has attracted nearly $3-billion in inflows this year, making it the second most popular ETF this year.