Continuing to benefit from the trend toward low-cost, index-tracking funds, Vanguard Group pulled in $148B in the first half of the year, topping last year's record H1 haul of $140B.
The fund giant sports four of the top 10 ETF inflow recipients so far this year, the S&P 500 Index Fund (NYSEARCA:VOO), the FTSE Developed Markets ETF (NYSEARCA:VEA), the REIT Index Fund (NYSEARCA:VNQ), and the Total Bond Market Index Fund (NYSEARCA:BND).
The $53B Vanguard Developed Markets Index Fund (MUTF:VDIPX) and its ETF cousin (NYSEARCA:VEA) will today begin tracking a new FTSE transition index as part of their change to a new target index: The FTSE Developed All Cap ex U.S. Index.
The transition will take place over six months.
The new index is broader than the previous one, including large-, mid-, and small-cap stocks as well as Canadian companies which will make up 7.4% of the benchmark.
In a note which would have been better-timed before the 6%-plus rally of the past few sessions, Citi strategists say the global bull market is aging, but not finished, and see a 20% gain between now and year-end 2016.
Not denying that global earnings aren't going to look good, Citi says stocks have already priced in this weakness.
Favored regions are those where QE is still going on: Europe ex-U.K., and Japan.
Due to a slowdown in emerging markets and softer output in the U.S., the World Bank downgraded its outlook for global economic growth this year, lowering its forecast by 0.2% to 2.8%. The bank expects growth of 3.3% in 2016.
With regards to the U.S., the World Bank decreased its 2015 prospects by 0.5% to 2.7%, saying a brutal winter sapped output in Q1 despite the economy now gathering steam.
Not necessarily a bear on American stocks, the global chief investment strategist suggests investors tamp down their return expectations given the rich values, and instead move a little money into cheaper international names.
“Investment professionals advocate diversification, but not everyone follows it. And U.S. dollar-based investors are structurally overweight in stocks. Right now it is a timely moment to reduce their allocation."
Much of the appreciation in U.S. stocks over the past few years, he says, is due to multiple expansion, rather than earnings growth.
ETF inflows year-to-date of $73.7B topped $67.9B from the same period one year ago, according to Credit Suisse, with Vanguard being the owner of four of this year's five best-sellers: The FTSE Developed Markets ETF (VEA), the REIT ETF (VNQ), the S&P 500 ETF (VOO), and the FTSE Europe ETF (VGK) each picked up at least $3.3B in inflows. Also in the top five is SSgA's Energy Select SPDR (XLE) with $3.2B.
This year's overall numbers aren't as relatively impressive when taking gold out of the equation, as $25B exited the SPDR Gold Trust one year ago, while flows this year have been relatively flat.