As we step into the second half of 2015, it might be useful to look at how the $2.16 billion ETF industry performed in the first half of the year. After analyzing, we can conclude that currency hedged ETFs and developed markets were the star performers in terms of asset gathering as these saw maximum inflows while the broader U.S. market was the laggard.

Though ‘Grexit’ worries in June had a last-minute impact on the half-yearly asset report, it could not totally derail the original sentiments. Let’s find out the top gainers and losers in terms of asset growth in the first half of 2015 (source: etf.com).

Gainers

Currency Hedging – WisdomTree Europe Hedged Equity (HEDJ)

Currency hedging as a technique rocked in the first half of this year while it came to playing the developed economies like Europe. The rounds of monetary easing and the launch of the QE policy revived the Euro zone this year.

While policy easing devalued European currencies, the greenback strengthened on rising rate worries in the U.S. This policy differential made the currency hedging theme a shining star in 1H (read: Can Anyone Match WisdomTree in Currency-Hedged ETFs?).

Thanks to this trend, HEDJ, an ultra popular Europe ETF, was at the helm, having amassed over $14 billion in assets so far. Another ETF, Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF), which tracks the stocks from Europe, Australia and Fast East, also added about $10.7 billion to its asset base and took the second spot.

Developed Economies – iShares MSCI EAFE (EFA)

Since accommodative policies were common in developed nations, from Europe to Japan to Australia and some emerging economies, EFA and Vanguard FTSE Developed Markets (VEA) took the third and tenth spots in the list, respectively. EFA hauled in about $6 billion while VEA gathered about $2.7 billion in assets.

Among the developed economies, Japan drew sizeable investor attention on stepped-up economic stimulus and after having come out of a technical recession in the final quarter of 2014. Though aggressive stimulus devalued yen and bolstered the appeal for the hedged Japan ETFs, regular funds also did well in the first half.
 

As a result, WisdomTree Japan Hedged Equity (DXJ) and iShares MSCI Japan ETF (EWJ) – taking the sixth and seventh spots – saw inflows of $4.4 billion and $3.24 billion, respectively. Europe ETFs also gave an all-star performance despite Greek debt default worries. Accordingly,Vanguard FTSE Europe (VGK) andiShares MSCI Germany (EWG) – the eighth and ninth position holders, each stacked up over $2.7 billion in assets.

Vanguard ETFs – Vanguard Total Stock Market (VTI) & Vanguard S&P 500 (VOO)

Since the relatively smaller market cap U.S. stocks rocked the show in 1H being better bets to guard from the rising dollar, the success behind VTI was self explanatory. As the name suggests, VTI targets stocks across the capitalization spectrum and amassed about $4.9 billion assets. However, this does not seem the sole reason for VTI’s success.

Vanguard’s low-cost approach was immensely popular in the last few years which is why the issuer saw its asset base growing by leaps and bounds. Probably, this was why VOO saw net asset inflows of $4.5 billion in 1H despite the broader market underperformance (read: Vanguard Poised to Become 2nd Biggest ETF Issuer).

Losers

U.S. – SPDR S&P 500 ETF Trust (SPY)

SPY, having witnessed an outflow of $42.7 billion in assets to date, was the hardest hit. Though it started to gain traction on several occasions this year in line with the broader U.S. economic recovery, it could not woo investors.

After all, the S&P 500 was flat in the first half. A soaring greenback and a harsh winter in the first quarter wrecked havoc on this benchmark index. Another core S&P 500 ETF by iShares (IVV) also lost about $2.37 billion in assets (read: 3 Small-Cap Growth ETFs to Buy for Q3).

Investors should note that other ultra-popular ETFs that track key U.S. bourses like Nasdaq and Dow Jones saw assets bleeding out of their products. PowerShares QQQ (QQQ), which looks to track the tech-heavy Nasdaq, shed about $2.83 billion in assets and became the third highest loser of 1H. SPDR Dow Jones Industrial Average Trust (DIA) too was in no better position, having lost about $1.67 billion in assets (read: Dow Jones ETF Caught in a Bull 'n' Bear Tug-of-War).

Emerging Markets – iShares MSCI Emerging Markets (EEM)

The fund comes as a distant second seeing a net exodus of about $3 billion in assets. The Fed rate hike worry was the major reason for investors’ aversion to the space. An anticipation of a cease in cheap dollar inflows may have caused investors to flee the space.

Rate Sensitive Sectors – Consumer Staples Select SPDR (XLP) & iShares U.S. Real Estate (IYR)

Rate hike concerns sent jitters in the high yielding sectors of the U.S. economy leading investors to shy away from consumer staples and REIT ETFs, known for high dividend yield. As a result, XLP had to sacrifice about $2.66 billion in net assets while IYR surrendered about $1.61 billion.