The iShares Core S&P 500 UCITS ETF (CSP1 LN) has become the first Europe-listed ETF to surpass £20 billion in assets under management as strong inflows and healthier market performance pushed the ETF through the milestone threshold.
The largest ETF in the US – the SPDR S&P 500 ETF Trust (SPY US) – also tracks the S&P 500 index. It has AUM of $266bn.
The ETF has enjoyed bumper net inflows of £418 million so far this month (to 23 May 2018), following relatively modest net inflows in April (+£57m) and net outflows in March (-£50m).
According to BlackRock, US equity ETFs listed globally experienced a pick-up in net inflows in April, amassing $6.9bn compared to redemption activity of $7.1bn in March.
Wei Li, head of iShares EMEA investment strategy at BlackRock, attributed the US inflows to “strong earnings expectations and robust macroeconomic data.”
BlackRock also noted the fund’s milestone was achieved owing to the general trend towards passive investing and the growth of the ETF industry, as lower costs and greater transparency continue to fuel investor interest in ETFs as portfolio construction tools.
Joe Parkin, head of iShares UK retail and wealth sales, previously told ETF Strategy that BlackRock expects further growth in Europe-listed ETF AUM to be driven by “the regulatory move towards fee-based advice, the growth of digital investment, and investor thirst for a varied investment toolkit that allows them to efficiently navigate an increasingly complex world.”
The ETF was also the first Europe-listed ETF to cross the $20bn mark, reaching the USD milestone in February 2017.
While bullish US sentiment was instrumental to achieving the previous landmark (the underlying S&P 500 Index rose approximately 26% in the year before the fund reached $20bn), the performance of the US equity market has been less of a contributing factor in recent months.
The US stock market underwent a significant correction at the end of January 2018, with the S&P 500 losing 10.1% between 26 January and 8 February. Volatility has risen from record low levels, and the performance of the US bellwether index is flat year-to-date.
The iShares Core S&P 500 UCITS ETF is physically backed and has a total expense ratio (TER) of 0.07%. The fund has several listings across Europe including on the London Stock Exchange, in US dollars or pound sterling; on the Borsa Italiana, Deutsche Boerse and Euronext Amsterdam, in euros; and on the SIX Swiss Exchange, in US dollars.
Interestingly, the two US-listed ETFs with the highest AUM also track the S&P 500 Index. They are the SPDR S&P 500 ETF Trust (SPY US) which holds $266bn in AUM and has a TER of 0.09%, and the iShares Core S&P 500 ETF (IVV US) which holds $152bn in AUM and has a TER of just 0.04%. Both funds are listed on NYSE Arca.