The Financial & Risk business of Thomson Reuters is now Refinitiv

All names and marks owned by Thomson Reuters, including "Thomson", "Reuters" and the Kinesis logo are used under license from Thomson Reuters and its affiliated companies.

September 1, 2017

Year to Date U.S. ETFs Outdraw Conventional Funds

by Tom Roseen.

Year to date through the fund-flows week ended August 30, 2017, U.S. ETFs have attracted some $247.2 billion of net new money, pushing total ETF assets under management over the $3.0 trillion mark. As might be expected—given the strong returns in the equity markets and despite perceived lofty valuations, geopolitical concerns, congressional gridlock, and a hawkish tone by the Federal Reserve Board—equity ETFs have attracted a net $168.6 billion for the year to date, compared to taxable bond ETFs’ $76.4 billion and municipal bond ETFs’ $2.2 billion.

Authorized participants (APs, ETF investors) continue to prefer nondomestic equity ETFs (+93.9 billion net, YTD) over their domestic equity counterparts (+$74.8 billion). Meanwhile, on the fixed income side APs have gravitated toward corporate investment-grade debt ETFs (+45.9 billion net) and Treasury ETFs (+$13.0 billion).

While recent geopolitical concerns (particularly surrounding North Korea’s missile launches), a weakening dollar, and a less accommodative stance by foreign central banks have influenced APs’ recent investment patterns, for Q3 thus far APs have injected some $15.4 billion net into domestic equity ETFs and $11.1 billion into nondomestic equity ETFs. APs have also padded the coffers of taxable fixed income ETFs to the tune of $16.0 billion net.

While iShares Core S&P 500 (IVV, housed in Thomson Reuters Lipper’s U.S. Diversified Equity ETFs macro-classification) has been the largest individual attractor of net new money year to date through August 30, taking in $20.0 billion, the next three largest attractors are warehoused in Lipper’s World Equity ETFs macro-classification: iShares Core MSCI EAFE ETF (IEFA, +$12.6 billion), iShares Core MSCI Emerging Markets ETF (IEMG, +$12.3 billion), and Vanguard FTSE Developed Markets ETF (VEA, +$11.2 billion). Drawing in the fifth largest amount of net new money and housed in Lipper’s taxable fixed income ETF macro-group is iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), taking in $9.4 billion.

In comparison, conventional mutual funds have not fared quite as well as their ETF brethren, attracting a little less than $54.3 billion net. Year to date fund investors have padded the coffers of taxable bond funds (+$119.8 billion) and municipal bond funds (+$13.6 billion); however, they are net redeemers of equity funds (-$55.3 billion) and money market funds (-$23.8 billion). Equity mutual fund flows are not a complete loss: As with their ETF counterparts, conventional fund investors have embraced nondomestic equity funds for the YTD period, injecting $30.9 billion net, but they have turned a cold shoulder to domestic equity funds, withdrawing a net $86.1 billion.

Find out more about Thomson Reuters Lipper, the global leader in independent fund performance data.

Get In Touch

Subscribe

We have updated our Privacy Statement. Before you continue, please read our new Privacy Statement and familiarize yourself with the terms.×