ETFs with the largest one-month inflows/outflows

Highest ETF inflows

The top ETF in terms of one-month trailing inflows was the iShares 20+ Year Treasury Bond ETF (TLT). This ETF was one of the worst-performing assets throughout 2022 thanks to aggressive Fed rate hikes and sticky inflation. Despite recent rallies, TLT is still down over -25% year-to-date. 

However, TLT saw $3.14 billion of inflows over the last month along with an 8.94% return during that time. The cause? Dovish comments from Fed Chairman Jerome Powell that hinted at an eventual pivot, along with better-than-expected inflation figures following December's CPI print.

Another similar ETF that saw $1.86 billion in inflows and a 2.63% return during this period was the iShares Core U.S. Aggregate Bond ETF (AGG). This ETF is a favorite among passive and institutional investors as a low-cost, highly liquid, one-size-fits-all bond universe ETF. 

AGG's duration isn't as high as TLT, so it has been markedly less sensitive to interest rate changes this year. Nonetheless, it still suffered historically unprecedented losses. Year-to-date, AGG is still down -12.21%. Are the recent inflows indicative of investor optimism around bonds? Only time will tell. 

Finally, we have the perennially popular iShares Core S&P 500 ETF (IVV) which saw $2.69 billion of inflows during this period. My suspicion here is that these inflows are largely the result of tax-loss harvesting, with investors buying IVV to avoid the IRS's wash-sale rule after selling another ETF at a loss. 

Highest ETF outflows

So, we know what investors have been buying, but what have they been selling? Leading the list of ETFs with the highest one-month outflows is the Vanguard Value ETF (VTV), a popular index ETF for investors seeking a low-cost value tilt. VTV saw outflows of $4.71 billion. 

VTV is one of the few funds that actually outperformed this year. With distributions reinvested, VTV is actually up 1.27%. Reasons behind this outperformance include the resurgence of the so-called "value risk premium" and the higher proportion of energy and consumer staples stocks in VTV.

So, are investors shunning value ETFs? I don't think so. Looking at the list of ETFs with the highest net outflows, I didn't see any other value ETFs. At the time, I don't have a good theory as to why investors are dumping VTV, so it's worth keeping a close eye on. 

On the other hand, investors continue to flee from growth ETFs. Case in point, the popular Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100 Index saw $2.62 billion leave over the last month. This makes sense when you consider the continued weakness in mega-cap tech earnings reports.

The next ETF reinforces my theory about tax-loss harvesting affecting year-end ETF outflows. While IVV saw net inflows, its closest competitor, the Vanguard S&P 500 ETF (VOO) saw outflows of $2.36 billion. Again, my theory is that Investors in VOO likely sold to tax-loss harvest into a comparable ETF.

Please note this article is for information purposes only and does not constitute investment advice.