Go with the flow

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Investors Love U.S. Stocks, Hate Gold

IndexUniverse just released its March 2013 ETF Fund Flows data last week, and it’s a pretty interesting look at what investors were buying last month, as well as what their behavior says about the markets going forward.

Here are the highlights:

  • Investors poured more than $18 billion into U.S. ETFs in March, bringing the total to $54 billion for Q1.
  • That was the third-biggest quarterly asset haul in the 20-year history of ETFs, and put asset gathering on track to crush 2012′s record year of inflows of $188 billion.
  • Total assets at the end of the quarter were 3% higher than at the end of February, 9% over Q4 and 21% over last year.
  • The WisdomTree Japan Hedged Equity Fund (NYSE:DXJ) was the most popular fund in the quarter, pulling in about $4 billion in assets. Obviously the Yen trade and loose policy at the Bank of Japan was a big driver of this as the Nikkei has soared.
  • The top ETF in inflows for the month of March was the iShares Core S&P 500 ETF (NYSE:IVV), which pulled in $2.27 billion. Clearly folks are learning about the power of low-cost index funds.
  • The iShares MSCI Emerging Markets Index Fund (NYSE:EEM) was the least popular ETF in March, with redemptions of $4.19 billion. So much for buzz about Samsung (PINK:SSNLF), which is its #1 component stock … top China holdings like Taiwan Semiconductor (NYSE:TSM) and China Mobile (NYSE:CHL) scared off traders.
  • And let’s not forget about gold. The world’s biggest bullion fund, the SPDR Gold Shares (NYSE:GLD), was No. 2 on the March redemptions list, with outflows of $1.68 billion, and led all redemptions in the first quarter with outflows of $6.62 billion.

So what does this mean?

Well, in a nutshell, it seems investors are bullish about equities as they plow their money into Japan and U.S. stocks. They are bearish on gold and China, based on redemptions.

Keep in mind that this IndexUniverse report is backward-looking, not forward-looking. But it’s worth noting nonetheless.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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