Best & Worst ETFs For Asset Growth

July 30, 2021

As the U.S. ETF industry moves past the $500 billion inflow mark so far this year, Vanguard, BlackRock and State Street have accounted for more than three-fifths of every dollar that’s entered the space.

ETFs from those issuers exclusively make up the top 10 largest funds in the U.S. market as of July 27, according to ETF.com data provider FactSet. Out of the top 100 funds, the trio has amassed just under $334 billion in this year’s inflows.

The top three funds are all broad-market stock followers, with the Vanguard S&P 500 ETF (VOO), the Vanguard Total Stock Market ETF (VTI) and the iShares Core S&P 500 ETF (IVV) pulled in a combined total of more than $68 billion.

The Schwab U.S. Dividend Equity ETF (SCHD) had the most inflows to date outside of the big three issuers, with just more than $7 billion coming in.

 

Top 10 ETF Inflows Year-To-Date

Ticker Fund YTD Inflows ($M)
VOO Vanguard S&P 500 ETF $31,440.07
VTI Vanguard Total Stock Market ETF $22,844.17
IVV iShares Core S&P 500 ETF $13,898.45
BND Vanguard Total Bond Market ETF $13,138.21
VTV Vanguard Value ETF $10,684.57
IEMG iShares Core MSCI Emerging Markets ETF $9,733.04
IUSB iShares Core Total USD Bond Market ETF $9,028.02
BSV Vanguard Short-Term Bond ETF $8,023.53
XLF Financial Select Sector SPDR Fund $8,006.02
BNDX Vanguard Total International Bond ETF $7,814.66

Data as of July 27, 2021

 

Vanguard Dominates

Vanguard funds combined generated inflows of just under $91.4 billion among six funds out of the top 10 so far this year.

VOO by itself has seen inflows of $31.4 billion, almost a third more than the second-place VTI, and nearly matching the combined haul of roughly $33 billion that BlackRock’s three ETFs in the top 10 have seen.

State Street’s lone entrant into the top 10 is the Financial Select Sector SPDR Fund (XLF), with $7.9 billion.

Vanguard’s dominance is even stronger when comparing the top 100 funds by inflows. The firm has a staggering $181.7 billion in inflows, well ahead of BlackRock’s $112.8 billion. But those two are far ahead in growth this year, as every other issuer with a fund in the top 100 had combined flows of $89.6 billion among 41 products.

 

YTD Inflows By Issuer

(For a larger view, click on the image above)

 

Worst Performers

The funds with the largest outflows this year are more varied across sectors, but high yield corporate bonds took the largest losses so far, with a combined loss of $24 billion among three of the top 10 ETFs for outflows. The likely reason is that junk bonds aren’t eligible for the corporate bond-buying program the Federal Reserve implemented at the beginning of the pandemic, making the space more susceptible to fears of default, while not producing similar returns to equities.

 

Top 10 ETF Outflows Year-To-Date

Ticker Fund YTD Outflows ($M)
LQD iShares iBoxx USD Investment Grade Corporate Bond ETF 13,558.96
USMV iShares MSCI USA Min Vol Factor ETF 8,170.31
GLD SPDR Gold Trust 8,054.11
SPY SPDR S&P 500 ETF Trust 6,027.67
HYG iShares iBoxx USD High Yield Corporate Bond ETF 5,985.72
JNK SPDR Bloomberg Barclays High Yield Bond ETF 3,428.79
SHV iShares Short Treasury Bond ETF 3,400.44
IWF iShares Russell 1000 Growth ETF 2,449.55
EFAV iShares MSCI EAFE Min Vol Factor ETF 2,432.44
IVW iShares S&P 500 Growth ETF 2,241.99

Data as of July 27, 2021

 

However, the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD) saw outflows of $14 billion, becoming the largest loser so far this year amid broader volatility in the bond market. The fund lost almost $1.7 billion on March 4 after Fed Chairman Jerome Powell said the central bank would not step in to reduce volatility in Treasury yields, which itself was triggered by fears of overvalued equity prices.

Investors have also exited positions in low volatility funds as equity markets largely rode the reopening play earlier in the year to multiple record highs. The iShares MSCI USA Min Vol Factor ETF (USMV) and the iShares MSCI EAFE Min Vol Factor ETF (EFAV) lost a combined $10.5 billion in assets under management so far this year.

The SPDR Gold Trust (GLD) has seen outflows of $8 billion so far this year, although it’s up by $317 million within the past three months as inflation fears mount. Those same inflation fears likely drove the $3.4 billion outflows from the iShares Short Treasury Bond ETF (SHV).

Finally, the SPDR S&P 500 ETF Trust (SPY) went in the opposite direction of its rivals VOO and IVV, to the tune of under $6 billion in year-to-date outflows. While SPY is s6basis points more expensive than the other S&P 500 tracker funds, it’s also likely affected by its status as a broader trading vehicle by day traders.

Contact Dan Mika at [email protected], and follow him on Twitter

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