Investment data provider Morningstar and mutual fund research firm Strategic Insight have in the past few days both released reports on US ETF asset flows for March 2012. Following is a roundup of the key themes.
US ETFs saw their tenth straight month of inflows in March, with $13.7bn of net new assets, according to Morningstar.
According to Morningstar, US ETFs saw their tenth straight month of inflows in March, with $13.7bn of net new assets. US-focused equity ETFs led the way with $7.7bn. All asset classes had positive flows for the third straight month.
iShares, the industry leader, saw outflows of $1.4bn after enjoying inflows in the previous three months. Over the past year, iShares’ market share has shrunk by 2.2% of total ETF assets to 41.3%. Meanwhile, State Street, Vanguard, and PowerShares have gained ground.
Volatility products continue to see buoying investor interest. The past two months represent the two largest monthly asset class inflows to date. Net assets in the category have grown by 57.5% since this time last year.
Despite substantial underperformance relative to their developed market counterparts, emerging-markets offerings saw substantial inflows. Vanguard Emerging Markets ETF (VWO) realised the third-largest fund-level inflow, $735m.
The move into emerging markets coincided with a shift away from developed market exposure. Foreign large blend offerings saw an aggregate outflow of $452m.
Meanwhile, Strategic Insight reported net US ETFs inflows of $10bn in March 2012, bringing total ETF net inflows to $53bn for the first quarter of 2012 – almost double the $27bn in net inflows to ETFs in the first quarter of 2011, and a pace that could result in the sixth straight year of $100bn or more in net inflows to US ETFs.
March’s ETF flows were led by ETFs tracking the S&P 500, including $2.8bn that went into the SPDR S&P 500 ETF (SPY). After those products, the most popular ETF categories in March were intermediate-term bond and diversified emerging markets equities, each of which drew about $1.4bn in net inflows.
Loren Fox, senior research analyst at Strategic Insight, said: “ETFs’ flexibility, including the ability to go long or short, has helped sustain net inflows across a variety of asset classes. We expect continued, broad-based growth of ETFs.”
At the end of March 2012, US ETF assets (including ETNs) stood at a record $1.21 trillion, up from $1.06 trillion at the end of December.