After a small step backwards in August, the U.S. ETF industry got back on track in September as an unexpected equity market rally and impressive cash inflows combined to deliver an impressive single month jump in assets. ETF assets finished the third quarter at nearly $901 billion according to the National Stock Exchange, an increase of more than 10% over the previous month. While strong performances from domestic and international equity markets helped to send the total higher, so did an impressive haul of new cash inflows. After August saw net cash outflows, nearly $28 billion flowed into ETFs in September. That brought the total for the year to more than $75 billion, well ahead of last year’s pace.
Not surprisingly, the majority of the inflows were to domestic and international equities; more than $1 billion per trading day flowed into these asset classes during the month. The S&P 500 SPDR (SPY) bounced back from a tough August and saw inflows of more than $10 billion. SPY now has about $78 billion in assets; the next largest U.S.-listed ETF, the Gold SPDR (GLD) has almost $55 billion. Despite a continued rally in gold prices, GLD saw only $120 million of cash inflows in September. The more cost efficient IAU, which recently slashed its expense ratio from 0.40% to 0.25%, took in $178 million on the month.
Also gaining ground on a more expensive rival was the Vanguard MSCI Emerging Markets ETF (VWO), which took in more than $2 billion. VWO’s assets have grown by more than 200% over the last year, compared to a still impressive 49% for iShares’ EEM. Both EEM and VWO seek to replicate the MSCI Emerging Markets Index; EEM charges 0.72% while EEM charges just 0.27%.
Each of the “big four” enjoyed a stellar September; aggregate inflows to iShares, State Street, Vanguard, and PowerShares approached $24 billion. But September was also a strong month for several smaller players. EGShares raked in $55 million, or nearly 50% of the previous month’s assets, thanks in part to an impressive start for its emerging markets consumer ETF (ECON). The recently-launched fund, which is the only ETF to target the consumer sector of global emerging markets, finished the month with about $27 million in assets.
Inflows to GlobalX ETFs totaled almost a third of the previous month’s assets, boosted by strong demand for Colombian equities and sector-specific China funds. And ALPS took in almost $120 million, or nearly 80% of the firm’s ETF assets at the end of August. That jump was due to the tremendous popularity of the first MLP ETF (AMLP), which finished its first full month of trading with about $170 million in assets. PIMCO was one of the few issuers to see net outflows last month; waning interest in safe haven MINT, which saw outflows of $169 million, was primarily to blame.
Other ETFs that saw a surge in interest in September included the iPath S&P 500 VIX Short Term Futures ETN (VXX, inflows of $824 million), the MidCap SPDR (MDY, inflows of $852 million), and the SPDR S&P Dividend (SDY, inflows of $716 million).
Disclosure: No positions at time of writing.
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