US ETF Inflows Hit A Record $188B In 2012

Olly Ludwig
January 02, 2013

ETF flows hit a record, as the virtues of the ETF wrapper continue to gain traction.


Investors poured a record $188 billion into U.S.-listed ETFs in 2012, eclipsing a previous record of more than $175 billion in 2008, as a variety of asset classes shined—including domestic as well as international equities, and particularly fixed income.

Overall, total ETF assets ended the year at almost $1.349 trillion, 27 percent higher than the $1.062 trillion a year earlier and 2 1/2 times as much as the $537 billion total at the end of 2008, according to data compiled by IndexUniverse.

The 2012 year-end asset total, just shy of an all-time record of $1.350 trillion reached on Thursday, Dec. 20, also reflects the rise in global stock markets, including a 7.3 percent increase in the Dow Jones industrial average in all of 2012.

Last year's impressive haul amounts to yet another clear sign that ETFs are not only here to stay, but are increasingly chipping away at the dominance of mutual funds. That's particularly clear in equities, where mutual funds have been facing outflows in the past few years while ETFs have raked in assets.

Investors are waking up to the low costs, transparency and tax efficiencies of exchange-traded funds by gravitating to the ETF wrapper, and the strong showing by fixed income in 2012 suggests bond funds are likely to be a vibrant and growing piece of the ETF universe going forward.

“2012 was the strongest year ever for ETFs, and for good reason,” IndexUniverse Director of Research Dave Nadig said. “Investors are realizing that the old high-cost, low-transparency mutual fund world makes less sense than ever. ETFs keep delivering on their core promises of low cost, good exposure, tax efficiency and liquidity.”


2012 Assets By Class And Total Assets ($, M)

Net Flows AUM % of AUM
U.S. Equity 68,960.66 607,025.77 11.36%
International Equity 52,116.46 332,453.77 15.68%
U.S. Fixed Income 43,981.15 226,889.05 19.38%
International Fixed Income 11,780.12 25,882.47 45.51%
Commodities 10,217.71 118,092.89 8.65%
Currency -1,476.16 2,690.28 -54.87%
Leveraged -873.08 13,583.89 -6.43%
Inverse -62.05 16,645.98 -0.37%
Asset Allocation 755.31 2,404.35 31.41%
Alternatives 2,962.97 3,246.85 91.26%
Total: 188,363.08 1,348,915.30 13.96%


To The Giants Go The Spoils

Of the $188 billion in 2012 inflows, $151 billion, or 80 percent of the total, came from the three biggest firms: BlackRock's iShares, State Street Global Advisors and Vanguard.

The dominance of bigger firms is by now a familiar tale in the U.S. ETF industry, which began about 20 years ago with the launch of SSgA's SPDR S&P 500 ETF (NYSEArca: SPY).

In that light, it's no surprise that last year's asset-gathering winner was SPY, the biggest ETF in the world. It pulled in $15.77 billion, or more than 8 percent of the total asset haul.

Also, we've spilled a bit of ink this year on the Nos. 2 and 3 funds: the Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM).

They both gathered about $10.5 billion, with the lion's share of EEM's asset haul occurring after Oct. 2, when Vanguard announced that next year it will abandon the MSCI index VWO has shared with EEM in favor of a benchmark created by FTSE.



A slew of iShares bond funds suffered outflows on Monday, March 2, but rising markets lifted total U.S.-listed ETF assets to $2.097 trillion.

'SPY,' 'GLD' and a slew of SPDR sector funds paced SSgA's issuer-leading outflows on Monday, March 2. But rising markets offset net outflows, lifting total U.S.-listed ETF assets to $2.097 trillion.


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