ETFs See $5B in May Inflows

Investors poured roughly $4.8 billion into in ETFs in May, bringing total year-to-date net inflows to $24.7 billion, Morningstar said in a report on May’s ETF performance.

According to the report, ETF flows are ahead of last year’s pace, when inflows equaled $20.3 billion through the first five months of 2009. The U.S. ETF industry closed out May with roughly $792.6 billion in total net assets, down nearly 7% from $849.6 billion last month (because of the market’s weak performance) and up 33% from $593.9 billion a year ago.

The most popular asset class in May was commodities with more than $5.6 billion in net inflows, led by SPDR Gold Shares (GLD), which now sits around $50 billion in total net assets and holds more than 1,200 tons of gold bullion.

In May, investors piled into GLD–to the tune of $4.2 billion–amid the general economic uncertainty and swirling fears of a Greek contagion scenario. Year to date, GLD alone has attracted roughly $5.3 billion in inflows, out of the $5.7 billion brought in by all 76 commodities ETFs combined. On the equities side, gold miners were also in focus, as investors poured roughly $890 million into Market Vectors Gold Miners (GDX) in May.

With fear and volatility dominating in May, the iShares Barclays 1-3 Year Treasury Bond (SHY) led all taxable-bond ETFs last month with about $906 million in net inflows last month. Also experiencing strong investor demand was the recently launched PIMCO Enhanced Short Maturity Strategy ETF (MINT). The actively managed PIMCO ETF, which is another ETF that essentially serves as a cash substitute for investors, had net inflows of $596 million in May.

U.S. stocks were the only asset class to experience net redemptions in May, with outflows of $4.7 billion. Leading outflows for domestic equity ETFs was PowerShares QQQ (QQQQ), which saw roughly $2.4 billion head for the exits last month.

Another soft spot in May, in terms of net flows, were REITs. Vanguard REIT Index (VNQ) and iShares Dow Jones US Real Estate (IYR) saw net outflows of $579 million and $307 million, respectively.

The Financial Select Sector SPDR (XLF) attracted about $513 million in total net inflows last month. Investors appear to be betting on a financials sector rally, Morningstar said, as Direxion Financial Bull 3x (FAS) pulled in $651 million in net new assets, while its sibling Direxion Financial Bear 3x (FAZ) shed some $357 million.

The Morningstar May report is at http://corporate.morningstar.com/us/documents/FundFlows/FundFlowsJune2010.pdf.