Credit: Shutterstock photoCinthia Murphy, Managing Editor, ETF.com
Investors bought heavily into U.S. equity ETFs in May, pouring some $27.6 billion into the asset class. The strong demand for U.S. stock funds, led by the iShares Core S&P 50 ETF (IVV), which alone gained some $5.4 billion in net assets last month, was a departure from what had been a steady preference among ETF investors for international stock funds this year.
Top Gainers (May 2018)
Also popular last month were fixed-income ETFs, attracting more than $6 billion in fresh net assets. In all, U.S.-listed ETF assets ended the month at $3.57 trillion.
Asset Classes (May 2018)
So far this year, the U.S. ETF market has attracted a healthy $122 billion in fresh new money. According to BlackRock, the asset-gathering pace both here and globally should remain strong, and could bring total global ETF assets to $12 trillion in the next five years. That projection assumes an annual rate of asset growth from current levels of about 20%.
That projection the asset manager behind iShares—the largest U.S. ETF provider—is making rests on four trends BlackRock says have accelerated in the past year. First among them is investors’ increasing active use of ETFs to access all sorts of areas in the market.
The search for low-cost investment vehicles as well as demand for exposure to various illiquid corners of the fixed-income market will also help fuel ETF asset growth. And finally, the ongoing trend among financial advisors to switch to a fee-based model will continue to benefit ETFs going forward.
What could change this forecast? According to Martin Small, head of iShares at BlackRock, not much.
“The direction of travel is permanent,” he said. “The velocity with which these milestones will be reached are best estimates based on current growth rates.”
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
