A familiar roster of massive, low-cost vanilla ETFs led by the SPDR S&P 500 ETF Trust (SPY) dominated net creations in October, helping bring the already-record-breaking annual inflows to $385 billion so far in 2017.
The data suggest that investors continue to plow assets into some of the cheapest, most liquid funds, buying into a U.S. stock market that’s surging to new highs in the face of an ongoing global growth story, and hopes of U.S. tax reform.
SPY Leads In October
U.S. equity ETFs saw nearly $30 billion in net creations, with funds like SPY, the iShares Core S&P 500 ETF (IVV) and the PowerShares QQQ Trust (QQQ) leading the haul. The 10 most popular ETFs last month attracted more than $25 billion in combined net assets, roughly half of all the fresh net inflows of $54 billion U.S.-listed ETFs received in October.
IVV is still holding onto the No. 1 spot as the most popular ETF of the year, attracting net assets of more than $27 billion year-to-date.
Also undeterred is investor demand for international equity exposure focused largely on developed and emerging markets. International equity ETFs have now gathered $137 billion in net creations this year, more than any other asset class.
One of the exceptions in this space was the iShares MSCI Spain Capped ETF (EWP), which bled more than 37% of its total assets last month in the face of the ongoing conflict between Spain and Catalonia’s leaders.
Fixed-Income ETFs
Not so popular last month was the iShares 20+ Year Treasury Bond ETF (TLT), which led outflows with net redemptions of $1.34 billion, as investors trim exposure to long-dated bonds ahead of what could be another rate hike before the year is over.
Still, demand for U.S. fixed-income ETFs was generally strong last month. The asset class raked in $8.2 billion in fresh net assets. Ten-year Treasury yields hit a seven-month high during October, but receded somewhat amid uncertainty over who will lead the Federal Reserve going forward.
The prevailing sentiment is that president Trump is likely to nominate Fed Governor Jerome Powell to replace Janet Yellen at the helm of the Fed. If nominated to replace Yellen, it would be the first time a Fed Chair wasn't reappointed since 1979, according to Reuters.
Total U.S.-listed ETF assets now total more than $3.267 trillion.
Top Gainers (October 2017)
| Ticker | Name | Issuer | Net Flows ($,mm) | AUM ($M) | % of AUM | YTD 2017 Net Flows($,M) |
| SPY | SPDR S&P 500 ETF Trust | State Street Global Advisors | 5,794.24 | 252,626.24 | 2.35% | -4,989.92 |
| IVV | iShares Core S&P 500 ETF | BlackRock | 3,933.06 | 133,283.99 | 3.04% | 27,239.86 |
| QQQ | PowerShares QQQ Trust | Invesco PowerShares | 2,644.87 | 57,041.38 | 4.86% | 3,560.35 |
| IEFA | iShares Core MSCI EAFE ETF | BlackRock | 2,500.01 | 39,548.03 | 6.75% | 18,977.28 |
| VOO | Vanguard S&P 500 ETF | Vanguard | 2,069.80 | 77,891.94 | 2.73% | 12,023.14 |
| IWM | iShares Russell 2000 ETF | BlackRock | 1,950.82 | 43,274.35 | 4.72% | 1,397.72 |
| IEMG | iShares Core MSCI Emerging Markets ETF | BlackRock | 1,731.13 | 40,260.26 | 4.49% | 15,134.43 |
| VEA | Vanguard FTSE Developed Markets ETF | Vanguard | 1,653.49 | 65,454.83 | 2.59% | 15,819.17 |
| XLI | Industrial Select Sector SPDR Fund | State Street Global Advisors | 1,583.26 | 12,682.46 | 14.26% | 987.98 |
| LQD | iShares iBoxx $ Investment Grade Corporate Bond ETF | BlackRock | 1,308.76 | 39,053.79 | 3.47% | 10,813.82 |
Top Gainers (Year-to-Date)
| Ticker | Name | Issuer | Net Flows ($,mm) | AUM ($M) | % of AUM | October 2017 Net Flows($,M) |
| IVV | iShares Core S&P 500 ETF | BlackRock | 27,239.86 | 133,283.99 | 25.69% | 3,933.06 |
| IEFA | iShares Core MSCI EAFE ETF | BlackRock | 18,977.28 | 39,548.03 | 92.25% | 2,500.01 |
| VEA | Vanguard FTSE Developed Markets ETF | Vanguard | 15,819.17 | 65,454.83 | 31.87% | 1,653.49 |
| IEMG | iShares Core MSCI Emerging Markets ETF | BlackRock | 15,134.43 | 40,260.26 | 60.23% | 1,731.13 |
| VOO | Vanguard S&P 500 ETF | Vanguard | 12,023.14 | 77,891.94 | 18.25% | 2,069.80 |
| LQD | iShares iBoxx $ Investment Grade Corporate Bond ETF | BlackRock | 10,813.82 | 39,053.79 | 38.29% | 1,308.76 |
| VWO | Vanguard FTSE Emerging Markets ETF | Vanguard | 9,618.39 | 64,809.52 | 17.43% | 1,078.22 |
| EFA | iShares MSCI EAFE ETF | BlackRock | 9,481.25 | 81,688.46 | 13.13% | 0.00 |
| AGG | iShares Core U.S. Aggregate Bond ETF | BlackRock | 9,206.99 | 51,155.55 | 21.95% | 1,061.48 |
| VCIT | Vanguard Intermediate-Term Corporate Bond ETF | Vanguard | 7,133.63 | 17,749.51 | 67.20% | 386.14 |
