ETFs Have Record Breaking Inflows Of $135B In Q1

April 03, 2017

In describing the amount of money that came into ETFs during the first quarter of 2017, "enormous" would be an understatement. "Record-breaking" is technically correct, but it also doesn't put the figure into proper context. 

Instead, consider that after the first three months of last year, inflows into ETFs totaled $29.6 billion. Over the same period this year, $134.7 billion entered the space―more than four times the amount of 2016's first quarter. If inflows continue at this torrid pace, total 2017 inflows will reach almost $540 billion, blowing past last year's record $287.5 billion. 

There's no guarantee that will happen. But the point is that the amount of money coming into ETFs is beyond the expectations of even the most optimistic analysts.

Many Reasons For Enthusiasm 
Invesors had plenty of reasons to plow money into ETFs this year. By some measures, confidence about the economy and the stock market hit the highest levels since the dot-com mania of nearly 20 years ago. Trump's bullish trifecta of tax cuts, deregulation and infrastructure spending were the catalyst for that.

While none of his big economic objectives have yet come to fruition, just the anticipation of business-friendly policies pushed the S&P 500 up by 6.1% during the first quarter. 

Then there's the secular shift away from high-cost mutual funds and toward low-cost ETFs. That has been occurring for years and certainly didn't change in Q1. The vast majority of money that came into ETFs during the period headed toward the cheapest exchange-traded funds.

Low-Cost ETFs Win
In fact, of the 10 ETFs with the largest inflows during the first quarter, nine of them had an expense ratio of 0.15% or less. That includes the iShares Core MSCI Emerging Markets ETF (IEMG). Its $6.6 billion worth of creations in the first quarter was the most of any ETF, and pushed its total assets under management to $27 billion.

Sentiment on emerging markets improved markedly from last year, when investors fretted about whether China was on course for a hard landing; whether a 1997-style financial crisis was brewing in the region; and whether Trump's trade policies would prove detrimental for emerging economies.

During the first quarter of this year, those concerns were no longer on the forefront of investors' minds. IEMG rallied 12.6% in Q1, two times the return for the S&P 500.

Broad Market Equity ETFs Lead The Pack
Despite the improving sentiment on emerging markets, investors were enamored with U.S. stocks, as evidenced by the big inflows into broad domestic ETFs. Three funds in the top 10 targeted the S&P 500, including the iShares Core S&P 500 ETF (IVV), the Vanguard S&P 500 Index Fund (VOO) and the SPDR S&P 500 ETF Trust (SPY). Notably, IVV's $6.2 billion worth of inflows were enough to propel its total assets to $102 billion, making it only the second ETF after SPY to cross the $100 billion milestone.

Other U.S. equity ETFs to garner big inflows were the iShares Core S&P Small Cap ETF (IJR) and the Vanguard Total Stock Market Index Fund (VTI). Each had inflows of more than $2.8 billion during the quarter.

Three international equity ETFs made the top 10: the Vanguard FTSE Developed Markets ETF (VEA), the iShares Core MSCI EAFE ETF (IEFA) and the iShares MSCI EAFE ETF (EFA), with inflows ranging from $3.3 billion to $4.3 billion.

The only fixed-income ETF to make the top flows list was the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), with creations of $3.4 billion. Most investment-grade bonds rallied modestly during Q1 even as the Fed hiked rates in March. 

Biggest Losers
Given the pervasive bullish sentiment running through markets so far this year, there weren't many ETFs to see big outflows during the first quarter. In fact, not a single ETF had outflows of more than $1 billion. 

The worst of the bunch was the First Trust Energy AlphaDEX Fund (FXN), with redemptions of $879 million. Some of that could have been due to quarterly rebalancing of First Trust's fund of funds, which go in and out of ETFs based on momentum and other factors. 

At the No. 2 position on the outflows list was the iShares Russell 1000 Growth ETF (IWF), with redemptions of about $750 million. That was followed by the WisdomTree Europe Hedged Equity Fund (HEDJ), also with outflows of about $750 million. HEDJ continued to bleed assets despite a rebound in the European stock market.

Other notable names on the quarterly outflow list included the iShares Edge MSCI Min Vol USA ETF (USMV), the SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and the iShares MSCI Mexico Capped ETF (EWW).

For a full list of the ETFs with the top inflows and outflows during Q1, see the tables below:

 

Top Gainers (Year-to-Date)

Ticker Name Issuer Net Flows ($,mm) AUM ($M) % of AUM March 2017 Net Flows($,M)
IEMG iShares Core MSCI Emerging Markets ETF BlackRock 6,623.13 27,021.97 32.47% 2,396.88
IVV iShares Core S&P 500 ETF BlackRock 6,150.57 102,051.87 6.41% 4,314.11
VEA Vanguard FTSE Developed Markets ETF Vanguard 4,301.12 47,674.19 9.92% 2,109.18
VOO Vanguard S&P 500 Index Fund Vanguard 4,052.09 63,908.21 6.77% 847.67
IEFA iShares Core MSCI EAFE ETF BlackRock 4,032.24 21,213.79 23.47% 1,895.82
SPY SPDR S&P 500 ETF Trust State Street Global Advisors 3,969.39 241,587.94 1.67% 6,588.60
LQD iShares iBoxx $ Investment Grade Corporate Bond ETF BlackRock 3,391.93 30,566.61 12.48% -314.98
EFA iShares MSCI EAFE ETF BlackRock 3,255.59 67,624.69 5.06% 1,605.08
IJR iShares Core S&P Small Cap ETF BlackRock 2,976.53 30,043.76 11.00% 17.29
VTI Vanguard Total Stock Market Index Fund Vanguard 2,827.48 76,250.29 3.85% 772.57

 

Biggest Losers (Year-to-Date)

Ticker Name Issuer Net Flows ($,mm) AUM ($M) % of AUM March 2017 Net Flows($,M)
FXN First Trust Energy AlphaDEX Fund First Trust -879.07 516.16 -63.01% -887.39
IWF iShares Russell 1000 Growth ETF BlackRock -750.76 34,312.40 -2.14% 494.06
HEDJ WisdomTree Europe Hedged Equity Fund WisdomTree -745.33 9,267.74 -7.44% -227.27
USMV iShares Edge MSCI Min Vol USA ETF BlackRock -711.91 12,317.07 -5.46% -8.97
JNK SPDR Bloomberg Barclays High Yield Bond ETF State Street Global Advisors -653.16 11,464.74 -5.39% -1,129.11
SCPB SPDR Bloomberg Barclays Short Term Corporate Bond ETF State Street Global Advisors -580.56 2,940.85 -16.49% -21.43
EWW iShares MSCI Mexico Capped ETF BlackRock -548.14 1,563.78 -25.95% -307.79
HYS PIMCO 0-5 Year High Yield Corporate Bond Index ETF PIMCO -502.56 1,781.24 -22.01% -295.75
HYG iShares iBoxx $ High Yield Corporate Bond ETF BlackRock -479.08 18,542.47 -2.52% 209.14
EWC iShares MSCI Canada ETF BlackRock -418.42 3,225.96 -11.48% -277.38

 

Asset Classes (Year-to-Date)

  Net Flows ($, mm) AUM ($, mm) % of AUM
U.S. Equity 58,246.33 1,610,724.17 3.62%
International Equity 39,175.29 592,787.17 6.61%
U.S. Fixed Income 31,085.34 443,483.61 7.01%
International Fixed Income 4,211.05 44,815.52 9.40%
Commodities 440.48 63,906.85 0.69%
Currency -275.08 2,854.15 -9.64%
Leveraged 1,043.89 26,732.46 3.90%
Inverse 961.89 17,280.21 5.57%
Asset Allocation -341.09 6,680.74 -5.11%
Alternatives 187.38 3,691.54 5.08%
Total: 134,735.47 2,812,956.43 4.79%

 

March 2017 League Table

Issuer Net Flows ($,M) AUM ($,M) % of AUM YTD 2017 Net Flows($,M)
BlackRock 22,617.19 1,085,132.02 2.08% 52,973.79
Vanguard 12,880.60 681,892.52 1.89% 40,318.59
State Street Global Advisors 4,236.99 538,009.65 0.79% 12,546.31
Invesco PowerShares -441.57 120,865.27 -0.37% 4,058.21
Charles Schwab 2,349.54 69,452.29 3.38% 6,755.07
First Trust 634.64 45,163.70 1.41% 2,148.18
WisdomTree -444.03 42,075.99 -1.06% -39.50
VanEck 661.09 35,369.24 1.87% 3,840.09
Guggenheim 452.57 34,648.98 1.31% 1,917.09
ProShares 632.95 27,276.77 2.32% 1,292.70
ALPS 320.45 14,480.66 2.21% 1,364.57
Deutsche Bank -492.21 14,021.51 -3.51% -187.55
Northern Trust 390.79 13,478.43 2.90% 1,299.80
PIMCO 228.42 12,956.55 1.76% 384.12
Direxion 668.54 11,467.67 5.83% 579.33
UBS 30.63 7,023.09 0.44% 13.87
Barclays Capital -389.84 6,623.56 -5.89% 147.12
Fidelity 237.89 6,183.17 3.85% 763.35
JPMorgan 54.95 5,224.78 1.05% 219.97
Global X 227.19 4,737.17 4.80% 766.35
US Commodity Funds 229.34 4,324.64 5.30% 95.33
Credit Suisse -57.83 3,622.82 -1.60% 477.33
Goldman Sachs 98.64 3,313.87 2.98% 254.35
Exchange Traded Concepts 144.97 2,650.22 5.47% 308.91
ETF Securities 2.73 2,415.65 0.11% 69.04
IndexIQ 102.72 2,359.75 4.35% 65.49
OppenheimerFunds 75.00 1,997.51 3.75% 393.34
Victory Capital Management 363.52 1,267.90 28.67% 547.53
ETF Managers Group 23.65 1,190.55 1.99% 206.12
AdvisorShares -1.44 1,091.80 -0.13% 11.30
Columbia 13.31 1,050.63 1.27% 3.48
Millington Securities Inc -22.44 1,014.59 -2.21% -48.97
Pacer Financial 46.02 873.85 5.27% 93.86
Virtus 75.69 859.57 8.81% 247.34
CitiGroup 201.92 777.21 25.98% 356.47
John Hancock 1.94 742.79 0.26% 47.16
Franklin ETF Trust 7.80 624.93 1.25% 58.21
The Principal Financial Group 0.02 560.33 0.00% 2.06
Highland Capital Management 1.91 483.91 0.40% 9.40
FQF Trust 19.02 474.44 4.01% 14.60
Cambria 26.19 411.85 6.36% 62.12
Swedish Export Credit -11.10 372.05 -2.98% -13.46
KraneShares 50.49 353.94 14.26% 60.98
Northern Lights 48.76 229.64 21.23% 99.97
Janus 0.00 182.54 0.00% 36.08
Alpha Architect 10.32 179.65 5.74% 36.25
Hartford 15.78 169.76 9.29% 22.25
Legg Mason 16.96 164.79 10.29% 23.90
Elkhorn -3.00 158.81 -1.89% 24.41
Teucrium -8.29 145.23 -5.71% -8.08
Merk -1.83 127.14 -1.44% 5.35
Arrow Investment Advisors 4.15 115.56 3.59% 4.15
Davis 37.40 98.41 38.00% 64.77
Morgan Stanley -0.00 96.44 -0.00% 0.00
Nuveen 2.41 95.01 2.54% 6.20
ARK 2.36 90.21 2.62% 15.24
Recon Capital 1.00 88.71 1.13% 6.42
Montage Managers 6.03 74.26 8.12% 19.45
US Global Investors 4.34 67.37 6.43% 1.54
Reality Shares 7.99 64.28 12.44% 16.29
BMO 0.00 53.01 0.00% 0.00
Academy Funds 0.00 38.43 0.00% 0.00
Aptus Capital Advisors 2.70 32.05 8.41% 5.36
AlphaMark Advisors 0.00 26.93 0.00% 0.00
OSI ETF Trust 3.76 25.42 14.79% 22.70
Strategy Shares 0.94 24.16 3.87% 0.94
Validea Capital Management 0.00 22.84 0.00% 0.00
Amplify 4.07 20.90 19.47% 9.45
Diamond Hill 0.00 19.33 0.00% 1.33
ACSI Funds 0.00 16.78 0.00% 4.12
Renaissance Capital 0.00 15.81 0.00% 0.00
Natixis 0.00 14.34 0.00% 0.00
TrimTabs Asset Management 0.70 12.13 5.80% 5.50
LocalShares -0.00 8.53 -0.01% -0.00
CSOP 0.00 8.28 0.00% -0.67
Premise Capital 0.00 8.07 0.00% 2.63
USCF Advisers 0.00 5.76 0.00% 0.00
AlphaClone 0.00 2.13 0.00% -0.99
StrongVest 0.00 0.00 0.00% 0.00

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.

 

 

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