ETFs scored big in the first quarter as equity demand surged

Funds had $70B worth of net inflows, with 90% in stocks
APR 18, 2013
By  JKEPHART
Exchange-traded funds are off to their best start ever, thanks to a surge in demand for equities. Investors poured a record $70 billion of net inflows into ETFs during the first quarter, topping last year's $65 billion, according to BlackRock Inc. More than 90% of the inflows, $65 billion, went into equities. Last year, just 65% of ETF inflows went into equities, according to Morningstar Inc. The flows into equities were helped by a strong market that saw several asset classes with double-digit returns and new all-time highs for both the Dow Jones Industrial Average and the S&P 500. The equity-centric flows in ETFs stand in stark contrast to mutual funds, where bonds had a slight edge year-to-date through March 20, the most recent data available. Bond funds had taken in about $67 billion, while equity funds had $62 billion of inflows. Because the majority of ETF assets are in equities already, it isn't surprising to see such heavy equity flows, said Morningstar analyst Mike Rawson. Fixed-income ETFs had $11.5 billion of inflows, down from $19.6 billion during the first quarter of last year. “Bond ETFs are gaining ground on mutual funds, but most people don't typically think to index that side of their portfolio,” Mr. Rawson said. One reason is that actively managed bond funds have done well against their benchmarks, unlike most equity funds. Almost 80% of investment-grade intermediate-term bond funds beat the Barclays Aggregate Index in 2012, according to Standard & Poor's. Over the previous five-year period, 60% outperformed. The most popular ETF was the $5.6 billion WisdomTree Japan Hedged Equity ETF (DXJ), which had just shy of $4 billion of net inflows. Dividend income and minimum volatility strategies were among the most popular ETF strategies, with inflows of $7.5 billion and $4.1 billion, respectively.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.