EWY took in $3.03B as SK Hynix ADR premium hit 51%. Semiconductor ETFs drew $4B in flows. Large-cap and value funds also attracted capital last week.
The ETF market saw a clear winner last week: the iShares MSCI South Korea ETF (EWY). It pulled in $3.03 billion, more than any other U.S.-listed fund. The reason traces to SK Hynix, the memory chip maker that is EWY's top holding at 24.18% of the portfolio.
SK Hynix's American depositary receipts began trading in New York this month. They immediately traded at a steep premium to the local shares on the Korea Exchange. The premium hit 51% on Wednesday before settling around 27% by Thursday afternoon, according to Bloomberg. The ADR books are closed for issuance and cancellation until July 29, which has kept the gap wide. Rather than pay that markup, investors bought EWY as a cheaper proxy for the same stock, traders said.
The semiconductor sector drew the next biggest wave. The iShares Semiconductor ETF (SOXX) took in $2.40 billion. The Direxion Daily Semiconductor Bull 3X ETF (SOXL) added $1.38 billion. The Roundhill Memory ETF (DRAM), which tracks memory-chip makers and has fallen more than 30% from its June peak, saw $1.66 billion in inflows. Investors treated the pullback as a buying opportunity, fund flows data show.
U.S. large-cap funds also attracted capital. The State Street SPDR Portfolio S&P 500 ETF (SPYM) gathered $1.82 billion. The Invesco NASDAQ 100 ETF (QQQM) took in $1.08 billion. For value seekers, the iShares MSCI EAFE Value ETF (EFV) collected $1.47 billion. The flows suggest a rotation toward international equities and away from the concentrated tech-heavy U.S. indexes, several market participants said.
The State Street Financial Select Sector SPDR ETF (XLF) added $962.88 million. Strong second-quarter earnings from JPMorgan (JPM) and other top holdings, combined with cooling inflation data that eased rate-hike fears, supported the sector.
Two newly launched ETFs also posted notable numbers. The SEI QiM U.S. Equity Factor Allocation Active ETF (SEUS), which started trading July 14, recorded $886.13 million in inflows. The Fidelity MSCI North American Subset Index ETF (FINA), launched July 9, attracted $853.50 million. FINA targets large- and mid-cap U.S. and Canadian stocks that meet emissions reduction targets approved by the Science Based Targets initiative.
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