2021 ETF Flows Shattering Records

The records piled up after a blazing-hot start for ETFs in the first quarter of 2021. According to the latest data from FactSet, U.S.-listed ETFs pulled in $245.4 billion in new money during Q1, the largest sum ever for any quarter.

Within the quarter were three very strong months, including inflows of $65.7 billion in January, $88.7 billion in February and $90.4 billion in March. In fact, March and February now stand as the second- and third-largest months for ETF inflows, respectively, behind only the $91.2 billion pulled in last November.

With one quarter in the books, 2021’s year-to-date inflows (equal to the Q1 figure) are more than triple the $71.9 billion seen at this same time a year ago. At the current pace, 2021 inflows would approach $1 trillion by year end, more than double the standing annual record of $476.1 billion set in 2017.

Strong Backdrop

2021’s inflows are no doubt being fueled by a roaring stock market and economy. The S&P 500 jumped 6.2% in the first quarter, while the Russell 2000 surged 12.9% in the same period.

Stocks are looking ahead to a stimulus-fueled economy that may expand by 11.7% on an annualized basis in Q2, and by 5.7% for the year as a whole, according to economists’ latest projections. That makes 2021 potentially the strongest year for growth since 1984.

Likewise, that strong GDP growth is expected to translate into stellar earnings growth for corporations. Profits for S&P 500 companies may surge 25% this year, exceeding pre-COVID levels, according to FactSet estimates. And they’re expected to jump another 15% next year.

With that backdrop, it’s not surprising to see investors so enthusiastically putting money to work in ETFs, including $119.9 billion in U.S. equity ETFs during the first quarter. Investors have also been bullish on international equities, where they’ve put $82.5 billion into related ETFs.

The Vanguard S&P 500 ETF (VOO), the Vanguard Total Stock Market ETF (VTI) and the Financial Select Sector SPDR Fund (XLF) are the top asset gatherers of the year so far, each with inflows of more than $9 billion.

Fixed Income’s Tepid Year

Meanwhile, U.S. fixed income ETFs are having a relatively tepid year by recent standards. Only $31.3 billion flowed into the space during Q1—though in the context of the market environment, that’s not too bad. Treasury prices tumbled between the start of the year and the end of March; the yield on the benchmark 10-year note rose from 0.91% to 1.74% (bond prices and yields move inversely).

The iShares 7-10 Year Treasury Bond ETF (IEF), the iShares 20+ Year Treasury Bond ETF (TLT) and the iShares Core U.S. Aggregate Bond ETF (AGG) shed 5.7%, 13.9% and 3.4%, respectively, during the quarter.

At the same time, the iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD) and the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) found themselves on the top outflows list for the year, with year-to-date redemptions of $10.4 billion and $4.6 billion, respectively.

The SPDR Gold Trust (GLD), another interest rate sensitive fund, had outflows of $7.5 billion in the same period.

Growth Stock Turbulence

Though stocks broadly marched higher during the first quarter, the indices masked over volatility in certain pockets of the market. In particular, growth stocks took a dive from their high point in mid-February to their low point in March.

The ARK Innovation ETF (ARKK), one of the most popular high-growth funds on the market today, dropped 29.6% peak-to-trough in just three weeks.

Yet interestingly, investors never lost confidence in the ETF. ARKK has actually been one of the most in-demand funds of the year, pulling in $6.5 billion of new money on a year-to-date basis.

Certainly, there was a rough patch in which ARKK had five straight days of outflows, but it didn’t put a significant dent in the fund’s assets. And now investors are back in buying mode; on Wednesday, investors added $717 million to ARKK—the fund’s largest daily inflow ever.

Investors’ confidence in ARK has extended not just to ARKK, but across the issuer’s suite. Each of ARK’s eight ETFs has seen year-to-date inflows, totaling $16.1 billion.

That includes an impressive $281 million inflow for the ARK Space Exploration & Innovation ETF (ARKX), ARK’s newest fund, which launched on Tuesday.

Total assets under management for ARK ETFs now stand at $43.8 billion, making ARK the tenth-largest ETF issuer.

For a full list of the top inflows and outflows for the year so far, see the tables below:

Top Gainers (Year-to-Date)

Biggest Losers (Year-to-Date)

Asset Classes (Year-to-Date)

Top Gainers (March 2021)

Biggest Losers (March 2021)

Asset Classes (March 2021)

March 2021 ETF Issuer League Table

Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.