Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. EXCHANGE-TRADED FUNDS
June 28, 2021 12:00 AM

Halfway through 2021, ETF flows already near new record

Ari I. Weinberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Reggie Browne
    Reginald M. Browne

    The exchange-traded fund market is red hot.

    On the heels of a record year for net inflows at $487 billion, the ETF market could surpass that amount in just a few weeks — with half a year to spare. According to FactSet Research Systems Inc., through June 21, U.S.-listed ETFs had captured $434 billion in net inflows and, unlike prior periods of intense asset growth for ETFs, this flow rally is remarkably broad.

    "A majority of the flows is coming from ETF models, which have grown significantly in the past year," said Reginald M. Browne, New York-based principal at electronic market maker Global Trading Systems LLC. "While the risk-on rally began last year with a large-cap bias, there has been a shift to value this year. Many sector funds are reinflating, as well as commodities and raw materials ETFs, rolling all the way down to short-duration fixed income."

    But Mr. Browne said that self-directed retail investors (even those who rally behind meme stocks) can't be overlooked as drivers of recent ETF activity. "They are a little bit less brand-driven and show no allegiance to any one issuer," he said. AT GTS, according to Mr. Browne, the ticket count from retail brokerage apps has doubled in the past year. Moreover, retail money market fund assets have been steadily declining, down $100 billion to $1.43 trillion since early February, according to Investment Company Institute data through June 16.

    In an recent research note, Matthew Bartolini, head of SPDR Americas research at State Street Global Advisors in Boston, wrote that 66% of products had experienced net flows through April 30, the highest "hit rate" for the first four months since 2014 when the industry product count was 40% less.

    ETFs on a roll
    Total net yearly ETF flows, in billions. Data for 2021 are through June 21.
    Source: FactSet Research Systems

    "In a more dispersed return environment, we're seeing more dispersed flows," Mr. Bartolini said. "The reflationary trade is driving interest in sector funds as investors look to generate alpha by overweighting cyclical industries, including financials, raw materials, and consumer discretionary, and underweighting health care, consumer staples, and utilities."

    Among the ETFs punching above their weight in flows this year include the $48 billion Financial Select Sector SPDR Fund, the $14.8 billion iShares MSCI EAFE Value ETF, and the $9.6 billion Vanguard FTSE All-World ex-US Small Cap ETF. Each of these ETFs — among nearly 500 others — experienced net inflows at roughly 50% or more than their 2020 year-ending assets through June 10, according to FactSet Research Systems.

    Moreover, 67 issuers are now managing between $100 million and $1 billion, up from 53 at the end of last year. "They have just enough assets for a good business without a major breakthrough fund," said Mr. Browne of GTS.

    This breadth of activity is building what Bloomberg Intelligence senior ETF analyst Eric Balchunas has called the ETF "middle class," where investors are lifting products and providers into long-term efficacy. While the hot hands at ARK Investment Management LLC attracted billions in assets earlier in the year, other thematic and specialty product providers have been able to draw investor assets. Examples here include the $198 million Direxion Moonshot Innovators ETF, the $170 million First Trust TCW Securitized Plus ETF, and the $389 million North Shore Global Uranium Mining ETF, each adding more than 500% of their year-end assets in net flows through June 10, according to FactSet. The strength in flows has been accompanied by a near stemming of ETF closures, with only 20 products being pulled from the market as of June 17, compared with 138 over the same period last year. And new products and entrants to the market over the next few years could look more like old faces. While the conversion of two Guinness Atkinson Asset Management mutual funds to ETFs in March was a groundbreaking move, Dimensional Fund Advisors LP's shift of four mutual funds to ETFs on June 14 provided a road map for large-scale conversions, boosting Dimensional's ETF assets under management to $30 billion from $2 billion in a day.

    "A similar decision by a firm like Capital Group could change that conversation completely," said Daniil Shapiro, associate director of product development at research and consulting firm Cerulli Associates Inc. This wraps into the "other big flow story," according to Mr. Shapiro, as the fund industry looks to find any form of kryptonite to beat back the relentless rise of Vanguard Group Inc.

    According to FactSet, Vanguard has pulled in $152 billion in net flows this year, nearly double the assets gathered by BlackRock Inc. at $80 billion, giving Vanguard $1.83 trillion in U.S. ETF assets compared with BlackRock's $2.28 trillion.

    Related Articles
    A $1.5 trillion milestone beckons for second-biggest ETF market
    U.S. ETFs increase fossil-fuel bond buying in 2020
    Dimensional Fund Advisors converts $29 billion mutual funds to ETFs
    Recommended for You
    ONLINE_180719919_AR_-1_PCWOTQTJSBML.jpg
    J.P. Morgan Asset Management to liquidate 2 index-based ETFs
    Vanguard sign
    Vanguard overtakes BlackRock to claim title of largest bond ETF
    BlackRock's Van Nostrand leaving; Ly to replace him on 2 carbon-transition ETFs
    Private Markets
    Sponsored Content: Private Markets

    Reader Poll

    August 10, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Gaining Momentum: Where Next for Trend-Following?
    The market opportunity in U.S. residential mortgage-backed securities
    Credit Indices Evolve with Enhanced Data Inputs
    Hedge Funds 2.0: Back to the future
    How Has 2022's Carnage Reshaped Global Stock and Bond Markets?
    Crossroads: Politics, Inflation, & Bonds
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    August 1, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit