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August 31, 2018

Year to Date Investors Remain Enamored of ETFs

by Tom Roseen.

Year to date through the fund-flows week ended August 29, 2018, investors have injected a net $177.0 billion into long-term mutual funds and ETFs. Equity funds have attracted $58.2 billion, while their fixed income counterparts have taken in a net $118.8 billion—with taxable bond funds attracting $107.4 billion and municipal bond funds $11.4 billion.

Interestingly, much of these flows can be attributed to exchange-traded products. On the conventional open-end funds side (ex-ETFs) equity funds have suffered net redemptions YTD to the tune of $16.6 billion, with large-cap funds (-$41.0 billion) witnessing the largest net redemptions of the macro-groups. Meanwhile, international equity funds (+$63.3 billion) have attracted the largest net draw. In contrast, mutual fund investors continue to pad the coffers of taxable bond funds (+$58.4 billion) and municipal bond funds (+$8.7 billion) YTD.

On the ETF side of the business equity ETFs have attracted a net $74.7 billion YTD, while taxable bond ETFs have taken in $49.0 billion and municipal bond ETFs have witnessed net inflows of $2.8 billion.

Preliminary YTD fund-flow estimates show BlackRock Fund Advisors (+$46.1 billion) as the top attractor of ETF assets, while Vanguard Group Inc. (+$44.0 billion) and Charles Schwab Investment Management Inc. (+$18.7 billion) have received the second and third largest amounts in the U.S. ETF space.

At the bottom of the barrel we note that State Street Bank and Trust Company (-$6.9 billion) and WisdomTree Asset Management Inc. (-$3.9 billion) have witnessed the largest net redemptions of the ETF promoters.

The ten top individual attractors of ETF assets have accounted for $66.9 billion of net inflows, with iShares Core MSCI EAFE ETF (IEFA, +$17.9 billion), iShares Core MSCI Emerging Markets ETF (IEMG, +$9.1 billion), and iShares Short Treasury Bond ETF (SHV, +$7.1 billion) attracting the largest sums of net new money YTD.

The ten ETFs that have suffered the largest net redemptions account for $57.0 billion of the YTD net outflows, with SPDR S&P 500 ETF Trust (SPY, -$20.4 billion) experiencing the largest net redemptions in the U.S. ETF universe, bettered by iShares MSCI EAFE ETF (EFA, -$10.2) and iShares MSCI Emerging Markets ETF (EEM, -$5.5 billion).

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