Investors poured more than $242 billion into U.S.-listed ETFs in 2015, with about $40 billion of that total coming in in December.
The strong asset-gathering pace late in the year—led by demand for equity funds, in particular—put year-end asset flows totals right in line with the previous year. It turns out 2015 was not a record-breaker.
Contrary to the prevailing expectation that the U.S. ETF market would continue to break asset-gathering records every year, 2015 brought only a match: $242 billion in net creations versus 2014's $243 billion total.
Still, big ETF issuers like iShares and Vanguard got bigger, and second-tier issuers such as WisdomTree and Charles Schwab saw even more significant growth, with their total ETF assets under management jumping 30-35% in the year. The number of ETF issuers also grew last year, with many new players coming into the space such as Goldman Sachs, John Hancock and USAA. If 2015 did not deliver an asset-gathering record, it did solidify the industry's footprint and its growth outlook ahead.
International Stocks All The Rage
The biggest draw last year was international equity ETFs, which attracted more than $109 billion in fresh net assets in 12 months, according to FactSet data. Behind that number, which represents about a 23% growth for the segment, was demand for developed-market exposure.
That demand oscillated between appetite for currency-hedged plays, and unhedged plays throughout the year. The two most popular funds in the segment were the currency-hedged WisdomTree Europe Hedged Equity (HEDJ | B-49) and the Deutsche X-trackers MSCI EAFE Hedged Equity ETF (DBEF | B-71).
These two ETFs started out the year as some of the most in-demand funds, and ended the year with net creations of $12.6 billion and $12.2 billion, respectively. But that doesn't mean investors were all in when it came to currency-hedged plays in 2015. In fact, in December, HEDJ and DBEF faced some of the biggest redemptions in the month as their performance faltered. HEDJ slipped 8.4% in December, while DBEF dropped 3.4%.
Still, both funds ended the year as two of the most popular funds of 2015, and in the black, each delivering 4-5% in total returns for the year.
In 2015, six out of the 10 most popular ETFs were international stock funds focused on developed countries, particularly the eurozone. Beyond HEDJ and DBEF, the iShares MSCI EAFE (EFA | A-93) saw net inflows of $9.2 billion.
US Large-Cap Stocks Also Shine (Some Of Them, Anyway)
The largest ETF creation, however, was a good-old U.S. stock fund: the Vanguard S&P 500 (VOO | A-98). Investors poured nearly $13 billion into the ETF in 2015, even though the fund delivered a modest 1.3% gain for the year.
What's interesting is that its counterpart, the SPDR S&P 500 (SPY | A-98), was the least popular fund of the year, with net redemptions exceeding $31.5 billion. SPY is often used as a trading tool—it is the most traded security in the world—so asset flows in and out of the fund can often be dramatic.
Vanguard's broader fund, the Vanguard Total Stock Market (VTI | A-100), was also hugely popular, with net asset gains of $7.4 billion in the same period. The fund, which is extremely cheap—at 0.05% in expense ratio—and which offers massive liquidity, is now a $58 billion ETF. In 2015, it delivered only 0.36% in total returns.
In all, last year saw $61.15 billion in fresh net assets land in U.S. equity ETFs—roughly 25% of all net creations for the year.
Back To The Basics In Fixed Income
Throughout the year, investors had been looking for the Federal Reserve to signal its next move. The Fed did eventually raise interest rates for the first time in seven years in December, but the uncertainty up until that point, coupled with market volatility—and bonds' generally unimpressive performance throughout the year—brought many investors back into broad strategies such as the iShares Core U.S. Aggregate Bond (AGG | A-98).
In 2015, investors poured more than $7.7 billion into AGG, making it the fifth-most-popular fund of the year. AGG is now a $30.6 billion fund—the largest fixed-income ETF in the market.
Emerging Markets Out Of Vogue
What no one seemed to want in 2015 was exposure to emerging markets. The iShares MSCI Emerging Markets (EEM | B-100) and the Vanguard FTSE Emerging Markets (VWO | C-86)—the two largest ETFs in the segment—faced net redemptions of $5.8 billion and $3.0 billion, respectively, last year.
The outflows came as the funds each slipped roughly 17% on the year.
|VOO||Vanguard S&P 500||Vanguard||12,929.72||40,435.72||98,928.49|
|HEDJ||WisdomTree Europe Hedged Equity||WisdomTree||12,664.77||16,940.84||84,605.23|
|DBEF||Deutsche X-trackers MSCI EAFE Hedged Equity ETF||Deutsche Bank||12,189.56||13,316.58||33,026.20|
|EFA||iShares MSCI EAFE||BlackRock||9,190.49||60,150.55||335,086.63|
|AGG||iShares Core U.S. Aggregate Bond||BlackRock||7,755.13||30,566.97||66,908.82|
|EZU||iShares MSCI EMU||BlackRock||7,465.84||14,465.22||71,425.28|
|VTI||Vanguard Total Stock Market||Vanguard||7,407.50||57,412.35||82,920.33|
|IEFA||iShares Core MSCI EAFE||BlackRock||6,612.82||9,610.99||22,509.66|
|VEA||Vanguard FTSE Developed Markets||Vanguard||6,135.13||29,288.35||62,729.44|
|LQD||iShares iBoxx $ Investment Grade Corporate Bond||BlackRock||5,669.72||24,021.91||89,096.48|
|SPY||SPDR S&P 500||SSgA||-31,511.36||182,039.45||6,581,224.76|
|EEM||iShares MSCI Emerging Markets||BlackRock||-5,796.61||21,530.72||549,323.20|
|VWO||Vanguard FTSE Emerging Markets||Vanguard||-3,084.18||34,452.00||152,597.65|
|XLI||Industrial Select SPDR||SSgA||-2,735.25||5,972.74||152,564.66|
|XLP||Consumer Staples Select SPDR||SSgA||-2,086.53||8,142.69||110,220.55|
|IYW||iShares U.S. Technology||BlackRock||-1,996.25||2,702.26||10,088.55|
|DVY||iShares Select Dividend||BlackRock||-1,473.91||13,265.74||18,268.71|
|IYR||iShares U.S. Real Estate||BlackRock||-1,393.32||4,442.37||196,235.32|
|IWM||iShares Russell 2000||BlackRock||-1,389.90||26,910.17||1,002,916.73|
Asset Class Data
|Net Flows ($M)||AUM ($M)||% of AUM|
|U.S. Fixed Income||55,884.23||328,520.28||17.01%|
|International Fixed Income||5,376.29||27,755.08||19.37%|
2015 Year-End League Tables
|Issuer||Net Flows ($M)||AUM ($M)||% of AUM||Turnover|
|US Commodity Funds||3,311.80||4,416.47||74.99%||149,116.81|
|Millington Securities Inc||448.09||1,487.12||30.13%||1,885.86|
|Emerging Global Shares||-451.62||908.06||-49.74%||3,038.60|
|Exchange Traded Concepts||92.51||427.04||21.66%||1,025.11|
|Swedish Export Credit||-189.82||391.02||-48.55%||1,392.96|
|Highland Capital Management||22.12||313.06||7.07%||492.21|
|Franklin ETF Trust||161.92||188.77||85.78%||201.86|
|Arrow Investment Advisors||16.53||117.07||14.12%||679.79|
|The Principal Financial Group||31.93||29.98||106.49%||19.10|
|Royal Bank of Canada||2.36||19.74||11.97%||45.06|
|TrimTabs Asset Management||15.93||13.98||113.90%||17.62|
|Huntington Strategy Shares||-5.55||12.70||-43.71%||26.63|
|ETF Issuer Solutions||-||-||-||-|
|ETF Managers Capital LLC||-||-||-||-|
December 2015 Asset Flows
Here's what ETF asset flows looked like the last month of the year:
|SPY||SPDR S&P 500||SSgA||5,578.11||182,039.45||610,344.06|
|EFA||iShares MSCI EAFE||BlackRock||2,975.94||60,150.55||39,004.96|
|EZU||iShares MSCI EMU||BlackRock||1,766.06||14,465.22||6,852.70|
|VOO||Vanguard S&P 500||Vanguard||1,765.01||40,435.72||11,999.98|
|IVV||iShares Core S&P 500||BlackRock||1,415.22||70,260.35||25,579.03|
|IEMG||iShares Core MSCI Emerging Markets||BlackRock||1,208.23||9,698.98||5,994.53|
|IWD||iShares Russell 1000 Value||BlackRock||1,068.36||27,359.56||8,154.86|
|IEFA||iShares Core MSCI EAFE||BlackRock||1,066.71||9,610.99||4,063.68|
|VEA||Vanguard FTSE Developed Markets||Vanguard||1,064.09||29,288.35||9,746.85|
|IWF||iShares Russell 1000 Growth||BlackRock||1,050.18||31,588.08||7,461.64|
|HEDJ||WisdomTree Europe Hedged Equity||WisdomTree||- 1,729.76||16,940.84||9,046.08|
|XLI||Industrial Select SPDR||SSgA||- 937.65||5,972.74||15,751.00|
|DXJ||WisdomTree Japan Hedged Equity||WisdomTree||- 904.01||14,905.19||7,350.46|
|IWM||iShares Russell 2000||BlackRock||- 725.71||26,910.17||87,146.63|
|JNK||SPDR Barclays High Yield Bond||SSgA||- 683.07||9,619.62||12,131.26|
|IGE||iShares North American Natural Resources||BlackRock||- 532.77||1,141.08||1,610.42|
|FXE||CurrencyShares Euro||Guggenheim||- 468.56||340.30||1,967.51|
|GLD||SPDR Gold||SSgA||- 415.48||21,930.61||12,901.93|
|IBB||iShares Nasdaq Biotechnology||BlackRock||- 358.83||8,122.08||11,217.71|
|VWO||Vanguard FTSE Emerging Markets||Vanguard||- 346.83||34,452.00||17,022.87|
|Asset Class||Net Flows ($M)||AUM ($M)||% of AUM|
|U.S. Fixed Income||2,670.81||328,520.28||0.81%|
|International Fixed Income||484.04||27,755.08||1.74%|