ETF Asset Flows Nearing New Annual Record

December 18, 2013

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Gold ETFs

If not for GLD, market would've already hit record asset flows.

Investors have poured more than $175 billion into U.S.-listed ETFs so far in 2013. With two weeks to go in the year, there's an opportunity to break last year's record flows level of $188 billion.

Truth be told, no one seems to doubt the ETF market will hit that target, and some are even suggesting it could well break through $200 billion in flows this year. Perhaps if it weren't for the incessant asset bleeding of the SPDR Gold Trust (GLD | A-100), that target could have already been in the bag. GLD has lost $24.25 billion in net redemptions to this point in the year.

Year-to-date, equity ETFs have been at center stage. Look at these flows numbers as of the end of November:

Asset Class YTD Flows
U.S. Equity ETFs $117.6B
International Equity ETFs $57.8B
U.S. Fixed-Income ETFs $8.5B
International Fixed-Income ETFs $1.3B
Commodities ($26.7B)

Indeed, equity ETFs alone have attracted more than $174.5 billion, and two-thirds of that money has landed into U.S. equity funds. That's hardly surprising in a year when the U.S. stock market again and again reached new record highs. In fact, the S&P 500 is on pace to end 2013 with its strongest annual gain in at least 15 years, rising more than 25 percent year-to-date.

Today U.S. equity funds represent roughly 50 percent of all U.S.-listed ETF assets, or $1 of every $2 tied to ETFs.

But as investors embraced riskier assets, the gold market plunged, with the price of gold dropping about 27 percent so far this year to near $1,235 today. In the process, investors yanked more than $23 billion from GLD alone—which is now a $32.8 billion fund—and more than $27 billion from all commodity ETFs combined.

If it weren't for GLD's massive asset losses, the ETF market would have already beat last year's flows record of $188 billion.

But even with GLD, the U.S. ETF market has been growing at a speedy clip of about 25 percent a year in recent years, and it's showing no signs of slowing down.

It may have taken nearly 18 years for the U.S. exchange-traded fund market to reach its first $1 trillion in total assets, but it's been a quick run to the $1.650 trillion market size of today.

The more the word spreads among retail investors about ETFs, the more institutional clients turn to ETFs for long-term asset allocation, and the more new key players enter the market—such as Fidelity, Franklin Templeton and even names like Eaton Vance—the more this market is going to grow.

So far in December, the market has seen net creations of more than $5.6 billion despite net outflows of more than $3.7 billion in the first week of the month. Total U.S.-listed ETF assets today sit at $1.650 trillion—a figure that includes net inflows as well as market movement.



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A roster of U.S. fixed-income ETFs topped the list of ETF creations Monday, Aug. 31, as investors poured $1.2 billion into the segment.

'SPY' paced State Street's issuer-leading inflows Monday, Aug. 31, as total U.S.-listed ETF assets hit $2.029 trillion.


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